Cross-border tax evasion after the common reporting standard: game over?
Journal of Public Economics, 2020, with E. Casi & C. Spengel
We study the short-term effect of the first global multilateral standard for the automatic exchange of information (AEOI), the so-called Common Reporting Standard (CRS), on cross-border tax evasion. Employing newly available bilateral data on cross-border deposits, we find that the CRS induced a reduction of 11.5% in cross-border deposits parked in tax havens. However, despite the 4000 bilateral information exchange relations created under the CRS, deposit relocation is still an option for secrecy-seeker. We find that the United States, which did not commit to the CRS, emerges as an attractive location for cross-border deposits.
Tax Strategy Disclosure: A Greenwashing Mandate?
Journal of Accounting Research, 2025, with K. A. Bilicka, E. Casi, C. Seregni
in the media: Forbes
In this project, we investigate the effects of a qualitative tax disclosure mandate aimed at improving the availability of tax information and tax compliance by imposing reputational costs for firms. We use, as an exogenous shock, the 2016 UK reform that required the disclosure of tax strategy details by large businesses. We find that treated firms—those that must publish a tax strategy report—significantly increase the volume of tax strategy disclosure in their annual reports but also provide more boilerplate statements. Disclosure volume and boilerplate increase the most for high public pressure and tax-aggressive firms. We show the important role that public pressure plays in facilitating this increase in disclosure volume, even in the absence of the mandate. We document no significant effect on tax avoidance. Our findings indicate that this requirement for qualitative tax disclosure has incentivized firms to portray themselves as “good tax citizens” without actually changing their tax practices.
The Value of a Loss: The Economic Impact of Restricting Tax Loss Transfers
Journal of Accounting Research, 2026, with A. T. Bührle, E. Casi & J. Voget
in the media: Fin Reg Blog
We study the economic consequences of anti-loss trafficking rules, which disallow the use of loss carry-forwards as tax shield after a substantial ownership change. We use staggered changes to these rules in the EU27 Member States, Norway, and the United Kingdom from 1998 to 2019 and find that limiting the transfer of tax losses reduces the number of M&A by 18%. The impairment is driven by loss-making targets. Turning to the broader impact on industry dynamics, we find decreases in survival rates of young companies in response to tighter regulations. Some of these start-up deaths are compensated by new firm entrants. Loosening of regulation spurs firm entry and survival. Finally, tightening (loosening) anti-loss trafficking rules impairs (increases) industry productivity, especially for R&D-intensive industries that are more prone to loss-making in their life cycle. This is driven by anti-loss trafficking rules muting deal synergies and risk-taking.
Lost in Information: National Implementation of Global Tax Agreements
conditionally accepted at the Journal of Public Economics, with A. Alstadsæter, E. Casi, & J.Miethe
We study how national implementation of global tax agreements shapes their effectiveness by focusing on the multilateral agreement on automatic information exchange on financial assets, the Common Reporting Standard (CRS). We create a new database on country-level enforcement, which we combine with 1) micro-level data on cross-border bank transfers to Norway with unparalleled detail on hidden ownership structures and 2) macro-level data on cross-border bank deposits. First, cash repatriation from tax havens increases significantly post-CRS implementation, but only from countries with high enforcement levels. Second, a highly digitized tax administration triggers twice the drop in tax haven deposits compared to paper-based systems.
Business model digitalization, competition, and tax savings
first round R&R with E. Casi, P. Lisowsky & M.Todtenhaupt
We examine the effect of business model digitalization on competition and how corporate tax savings through digitalization may augment this relationship. Global policymakers express concern that digitalization-related tax savings unfairly benefit the competitive standing of rival firms over their competitors. Using textual analysis techniques to identify firms’ business models, we show that rivals’ adoption of a digital business model leads to negative effects on the performance of their non-digitalizing competitors. We estimate that a one standard deviation increase in the share of digitalized rivals in a market reduces a competitor’s market share by 4.6%. Suggesting significant tax savings from digitalizing, we also find that digitalizing rivals substantially reduce their effective tax rates, mostly by increased use of tax havens. However, when we test whether the detected competitive externalities vary with the share of digitalizing rivals with versus without substantial digitalization-related tax savings, we find the economic magnitudes of their effects are quantitatively similar. Therefore, contrary to policymakers’ concerns that digitalization-related tax savings unfairly shape competition, our findings suggest that tax savings from digitalization are not a key driver of changes in competition between digitalized and non-digitalized firms.
Does the Tax Benefit of Debt Affect the Market for Corporate Control?
with Eliezer Fich, Lisa Hillmann, and Johanna Kling
in the media: ECGI Blog
Despite extensive research, evidence on whether the debt tax shield affects corporate investment remains mixed, and its implications for investment value creation are less understood. We examine these questions in the market for mergers and acquisitions (M&A), where debt plays an important financing role and deal outcomes can be observed to assess value creation. Exploiting the introduction of interest limitation rules across 43 countries, we find that reductions in the debt tax shield decrease M&A activity. The decline is concentrated in cash-financed deals and among debt-dependent acquirers, while stock-financed deals are unaffected. Importantly, transactions occurring after these rules take effect exhibit weaker market reactions and lower realized returns, consistent with reduced value creation. We find little evidence that tax-motivated deals drive this decline but document changes in target selection toward smaller, less profitable and less efficient firms. Overall, our findings suggest that reducing the debt tax shield can hinder value-enhancing, debt-dependent acquisitions.
Local Effects of Global Tax Transparency
with Elisa Casi, Rebecca Lester, and Mickael Sixdenier
We study whether global tax transparency reforms designed to curb offshore evasion impose unintended costs on compliant taxpayers outside tax havens, using the introduction of FATCA and U.S. citizens living in Norway as a laboratory.
Leveraged Buyouts, Debt Tax Shields, and the Real Economy
with Lisa Hillmann and Marcel Olbert
We exploit the introduction of interest limitation rules to study the role of the debt tax shield in private equity value creation and its consequences for investment, employment, and innovation.
Tax-Motivated Transactions and Loss Carryforwards
with Annette Alstadsæter, Theresa Bührle, Elisa Casi, and Rebecca Lester
Using administrative data on the full population of Norwegian firms, we study how loss carryforwards are used for tax planning, focusing on acquisitions of shell companies with unused tax losses.
Tax-Favored Real Estate Markets and Broader Economic Consequences
with Lisa Hillmann and Felix Jungmann
We examine how limits on interest deductibility affect housing supply and prices, given the real estate industry’s heavy reliance on debt financing.
Hidden Financial Asset Ownership: Mapping Illicit Financial Flows to Developed Countries
with Elisa Casi, Rebecca Lester, and Floris Zoutman
Using new administrative data from Norway, we map the beneficial ownership of financial assets held through offshore structures and study the local economic effects of exposing hidden foreign ownership.
Citizenship/Residence by Investment and Digital NomadVisas: The Golden Era of Individual Tax Evasion and Avoidance?, Chapter in Research Handbook on the Economics of Tax Havens, Ed. A. Lejour and D. Schindler (Edward Elger Publishing) joined with E. Casi & M. Mardan, WP version online.
In recent decades, increased mobility of capital and labor improved individuals’ opportunities to avoid or evade tax. This chapter explores two programs commonly provided by tax havens that facilitate individuals in dodging taxation in their home country. We first focus on longer-existing initiatives targeting wealthy individuals by offering citizenship and residence-by-investment (CBI/RBI) programs and discuss how they allow individuals to evade taxes. We then delve into the recently launched digital nomad visa (DNV) programs, which grant individuals temporary residence in a country while working exclusively remotely. We provide a comprehensive overview of the key features of existing programs based on a novel, hand-collected dataset. Currently, more than 40 countries offer a DNV program, and half of them are tax havens. Although DNV programs mainly create concerns about tax avoidance, they can also provide tax evasion opportunities similar to those documented in the literature for CBI and RBI programs.
R&DTax Incentive Regimes – A Comparison and Evaluation of Current Country Practices, 2022, World Tax Journal, joined with C. Spengel & D. Steinbrenner
In this article, we evaluate qualitatively and quantitatively the current R&D tax incentive regimes in place in ten important foreign direct investment (FDI) countries (Belgium, China, France, Germany, Ireland, the Netherlands, Spain, Switzerland, the United Kingdom, and the United States) considering effects on location attractiveness, innovative activity and profit shifting. The environment of offered R&D tax incentives has been highly dynamic in very recent years. Furthermore, the importance of innovative activities is accentuated during an economic crisis. First, we qualitatively analyse the different design features of the existing R&D tax incentives in their sample countries. Second, we use forward-looking effective average tax rates to measure their effect on location attractiveness quantitatively. Our main finding is that input and output-oriented R&D tax incentives continue to play an important role internationally and that the regimes in place have a considerable impact on forward-looking effective average tax rates, i.e., on countries’ tax attractiveness for R&D investments.