The aim of this research project is to analyze the allocative effect of corporate taxation and to quantify how it influences the number and volume of mergers and acquisitions (M&A) in the European Union. The more acquisitions are prevented the stronger is the welfare loss due to unrealized synergy gains. In this respect it is of particular relevance how the number of M&A reacts to the taxation of capital gains on the shareholder level.
On the corporate level, capital gains taxation may be of similar importance. A multinational company may have to pay taxes on the capital gains realized when selling one of its subsidiaries. This project analyses how this affects the number and volume of acquisitions.
An additional focus of the project is the importance of tax system complexity for investment. Greenfield investments often face administrative barriers because the investor lacks substantial knowledge on the legal system of the target country. These costs may be included in the takeover price when the investment is an M&A. Tax system complexity will have to be assessed and categorized before conducting further empirical analysis.
01.01.2015 - 31.12.2016
Corporate Taxation and Public Finance