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Title:The taxation of passive foreign investment: lessons from German experience PDF Logo
Authors:Ruf, Martin
Weichenrieder, Alfons J.
Issue Date:2009
Series/Report no.:CESifo working paper 2624
Abstract:The paper evaluates the working of German CFC rules that restrict the use of foreign subsidiaries located in low-tax countries to shelter passive investment income from home taxation. While passive investments make up a significant fraction of German outbound FDI, we find that German CFC rules are quite effective in restricting investments in low-tax jurisdictions. We find evidence that the German 2001 tax reform, which unilaterally introduced exemption of passive income in medium- and high-tax countries, has led to some shifting of passive assets into countries for which the exemption was previously limited.
Subjects:foreign direct investment
CFC regulation
passive investment
JEL:H25
H73
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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