Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/229446 
Year of Publication: 
2021
Series/Report no.: 
ZEW Discussion Papers No. 21-008
Publisher: 
ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung, Mannheim
Abstract: 
Anti-tax loss trafficking rules disallow the use of loss carryforwards after a change in ownership or activity (such as significant changes in turnover, employment, or the product portfolio). This restriction could threaten accumulated loss carryforwards of start-ups. Accounting for the increased risk and reduced return on their investment, VC investors could reduce their funding. I analyze whether the venture capital (VC) funding of start-ups in Europe is affected by these regulations. I base my empirical analysis on several case studies and a panel analysis covering VC- funded companies in the EU28 Member States from 1999 to 2014. My findings suggest that strict anti-tax loss trafficking rules indeed impair VC funding. Especially more mature companies and companies in high-tech industries are affected.
Subjects: 
Venture capital
taxes
loss carryforward
start-ups
anti-tax loss trafficking
JEL: 
M13
G24
H25
Document Type: 
Working Paper

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