2006–2010

Cross-Border Acquisitions and Taxes: Efficiency and Tax Revenues

Reprint No. 2009:40

Author(s): Pehr-Johan Norbäck, Lars Persson and Jonas VlachosYear: 2009 Title: Canadian Journal of Economics Volume (No.): 42 (4) Pages: 1473–1500
Online article (restrictions may apply)


We develop a theoretical oligopoly model to study how international differences in profit and capital gains taxes affect foreign acquisitions. Reductions in foreign profit taxes tend to trigger inefficient foreign acquisitions, while reductions in foreign capital gains taxes may trigger efficient foreign acquisitions. Foreign acquisitions can increase domestic tax revenues even when profit taxes are evaded. The reason is that bidding competition between foreign firms ensures that all benefits from the acquisition, including tax advantages, are captured by a domestic seller paying capital gains taxes. Tax code issues, such as the treatment of goodwill, are shown to affect the pattern of foreign acquisitions.


Reference:
Norbäck, Pehr-Johan, Lars Persson and Jonas Vlachos (2009), "Cross-Border Acquisitions and Taxes: Efficiency and Tax Revenues". Canadian Journal of Economics 42(4), 1473–1500.

Pehr-Johan Norbäck

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Lars Persson

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Jonas Vlachos

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jonas.vlachos@ne.su.se

An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

Omslag 2017 Institutional Reform for Innovation and Entrepreneurship.jpg

The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.

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