Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/226227 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8525
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
This paper investigates how multinational banks use internal debt to shift profits to low-taxed affiliates. 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.
Subjects: 
profit shifting
internal debt
multinational banks
taxation
JEL: 
H25
G21
F23
Document Type: 
Working Paper
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