Abstract: We study the effect of mandatory disclosure rules on aggressive tax planning arrangements. We focus on the one introduced in 2018 under the Council Directive 2018/288/EU (or DAC6) and study its effect on tax evasion. We show a reduction of cross-border deposits in EU countries with a strong enforcement but also a relocation of funds to countries with limited intermediary reporting obligation. Finally, we detect an increase of USD 14 billion in cross-border deposits held by residents of countries offering citizenship/residence by investment programs, suggesting the use of these schemes as regulatory arbitrage to circumvent the disclosure mandated under DAC6.

Abstract: Firms in the digital economy often pay little tax in the countries where their customers are based. In response, market countries have introduced digital service taxes on the revenue of these firms to indirectly tax their profits. We study the incidence of these taxes using data on Amazon, the largest online retailer. We find that, on average, Amazon increased its fees by roughly half the amount of the digital service tax. Firms using Amazon as a platform have largely passed these increased fees on to consumers. Large digital firms thus bear only a small part of the tax burden, but the tax may nevertheless succeed in making them less competitive relative to brick-and-mortar competitors.

Media mention: Trump threatens 50% tariffs. How might Europe strike back? in the Economist.

Abstract: Zombie firms are firms that continue to operate despite prolonged periods of financial distress. When part of a group, such firms may serve as tax planning instruments by facilitating profit shifting or loss offsets. This paper studies the role of zombie firms in group-level tax planning by examining their response to DAC6, an EU directive mandating the disclosure of aggressive tax planning arrangements. Using firm-level data from ORBIS and a differences-in-differences design, I find that following DAC6, group zombie firms in the EU are more likely to exit the market than their non-EU counterparts. Among surviving firms, the probability of remaining a zombie declines for EU group firms. Heterogeneity analyses show that both firm location and group headquarters location shape these responses, highlighting how zombie firms are used within groups for tax planning purposes.