Assessing the tax benefits of hybrid arrangements evidence from the Luxembourg leaks Inga Hardeck and Patrick U. Wittenstein
By: Hardeck, Inga
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Contributor(s): Wittenstein, P. U.
Material type: 
ArticlePublisher: 2019Subject(s): EMPRESAS MULTINACIONALES | IMPUESTOS | TAX RULINGS | PARAISOS FISCALES | LUXEMBURGO | ELUSION FISCAL
In:
National Tax Journal v. 71, n. 2, June 2018, p. 295-334Summary: Using the Luxembourg Leaks database, we study how multinational firms avoid taxes via hybrid arrangements and assess their corresponding tax benefits. Confidential tax rulings included in this database enable us to deduce and classify the tax arrangements that 123 firms implemented by means of conduit entities in Luxembourg. Based on a difference-in-differences methodology, we show that hybrid arrangements are related to substantial and continuous effective tax rate reductions. These results hold under several robustness checks. Overall, our paper is one of the first to provide empirical support for the considerable benefits of hybrid arrangements outlined in prior theoretical research.
| Item type | Current location | Home library | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Artículos | IEF | IEF | OP 233/2018/2-4 (Browse shelf) | Available | OP 233/2018/2-4 |
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| OP 233/2018/2-1 Raising the stakes | OP 233/2018/2-2 The effect of flat tax rates on taxable income | OP 233/2018/2-3 Perceptions and realities of average tax rates in the federal income tax | OP 233/2018/2-4 Assessing the tax benefits of hybrid arrangements | OP 233/2018/2-5 More than they realize | OP 233/2018/3 National Tax Journal | OP 233/2018/3-1 Tax incidence in a vertical supply chain |
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Using the Luxembourg Leaks database, we study how multinational firms avoid taxes via hybrid arrangements and assess their corresponding tax benefits. Confidential tax rulings included in this database enable us to deduce and classify the tax arrangements that 123 firms implemented by means of conduit entities in Luxembourg. Based on a difference-in-differences methodology, we show that hybrid arrangements are related to substantial and continuous effective tax rate reductions. These results hold under several robustness checks. Overall, our paper is one of the first to provide empirical support for the considerable benefits of hybrid arrangements outlined in prior theoretical research.
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