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dc.contributor.authorEgger, Peteren_US
dc.contributor.authorMerlo, Valeriaen_US
dc.contributor.authorRuf, Martinen_US
dc.contributor.authorWamser, Georgen_US
dc.description.abstractUntil 2009, the United Kingdom operated a system of worldwide taxation. Taxation of foreign income was deferred until repatriated as dividends, leaving UK-owned multinational firms the possibility of avoiding UK taxation by delaying dividend payments and keeping earnings abroad. In 2009, the UK switched to a system under which all foreign-earned income is exempted from taxation. This fundamental change had a number of straightforward implications for UK-owned multinational firms and particularly changed incentives to repatriate profits. This paper assesses the effects of the reform on the foreign affiliates of UK-owned multinational firms. We use data provided by Bureau van Dijk on 61,738 foreign affiliates located in one of 29 European countries to estimate the impact of the reform on the repatriation pattern and other outcomes of UK-owned affiliates. We use an identification approach that quasi-randomizes over the country of residence of the ultimate firm owners, allowing us to compare outcomes of treated UK-owned foreign affiliates to control non-UK-owned foreign affiliates. Our results suggest that the switch to tax exemption not only changed dividend repatriation behavior of firms but also the conditions under which foreign entities operate in general, for instance, with regard to investment behavior.en_US
dc.publisherCenter for Economic Studies and Ifo Institute (CESifo) Munichen_US
dc.relation.ispartofseriesCESifo Working Paper: Public Finance 3942en_US
dc.subject.keywordUK Tax Reform 2009en_US
dc.subject.keywordtax exemption systemen_US
dc.subject.keyworddividend exemptionen_US
dc.subject.keywordforeign direct investmenten_US
dc.subject.stwMultinationales Unternehmenen_US
dc.subject.stwAusländische Tochtergesellschaften_US
dc.titleConsequences of the new UK tax exemption system: Evidence from micro-level dataen_US
dc.typeWorking Paperen_US
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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