Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/176979
Authors: 
Overesch, Michael
Schenkelberg, Sabine
Wamser, Georg
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper 6960
Abstract: 
Using pairs of similar US and European firms listed on the S&P500 or StoxxEurope600, we examine effective tax differentials between US multinational corporations (MNCs) and their European peers. We show that statutory tax rates and profit shifting opportunities are important determinants of effective tax rates. Our findings suggest substantially lower total tax payments of US MNCs after the 2017 US tax reform. Based on past reforms of Controlled Foreign Company (CFC) rules and of the principle of worldwide taxation, we confirm that international tax legislation affects effective tax expenses. We also provide evidence for heterogeneity in firm responses: MNCs with profit shifting opportunities benefit most from more-lenient CFC rules.
Subjects: 
effective tax rate
tax avoidance
tax reform
CFC rule
international taxation
pair matching
difference-in-differences analysis
JEL: 
H26
H32
F23
Document Type: 
Working Paper

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