Template-Type: ReDIF-Paper 1.0

Author-Name: Franz Reiter 
Author-X-Name-First: Franz 
Author-X-Name-Last: Reiter 

Author-Name: Dominika Langenmayr 
Author-X-Name-First: Dominika 
Author-X-Name-Last: Langenmayr 

Author-Name: Svea Holtmann
Author-X-Name-First: Svea 
Author-X-Name-Last: Holtmann

Title: Avoiding Taxes: Banks' Use of Internal Debt 
	
Abstract: This paper investigates how multinational banks use internal debt to shift profits to low-taxed afiliates. Using regulatory data on multinational banks headquartered in Germany, we show that banks use this tax avoidance channel more aggressively than non-financial multinationals do. We find that a ten percentage points higher corporate tax rate increases the internal net debt ratio by 5.7 percentage points, corresponding to a 20% increase at the mean. Our study also takes into account the existence of conduit entities, which simply pass through financial flows. If conduit entities are systematically located in low-tax countries, previous studies may have underestimated the extent of debt shifting 

Length: 37 pages
Creation-Date:  2020-05
File-URL: http://www.bgpe.de/texte/DP/196_Reiter_Langenmayr_Holtmann.pdf
File-Format: Application/pdf
File-Function: First version, 2020
Number: 196
Classification-JEL: H25, G21, F23

Keywords: Profit Shifting, Internal Debt, Multinational Banks, Taxation

Handle: RePEc:bav:wpaper:196_ReiterLangenmayrHoltmann