Little is known about how banks shift profits to low-tax countries. Because of their specific business model, banks use profit shifting channels different from those of other firms. We propose a novel and bank-specific method of profit shifting: the strategic relocation of proprietary trading to...

This paper investigates how multinational banks use internal debt to shift profits to low-taxed affiliates. Using regulatory data on multinational banks headquartered in Germany, we show that banks use this tax avoidance channel more aggressively than non-financial multinationals do. We find...

This paper investigates how multinational banks use internal debt to shift profits to low-taxed affiliates. Using regulatory data on multinational banks headquartered in Germany, we show that banks use this tax avoidance channel more aggressively than non-financial multinationals do. We find...

Tax havens represent the largest financing hub for financial institutions. For banks, they account for more than 20% of all cross-borders banking debt worldwide. Yet, our understanding of the underlying drivers remains limited. Drawing on a unique global dataset covering major international...

To combat firms exploiting transfer pricing as a tool for tax avoidance, the Organisation for Economic Co-operation and Development (OECD) introduced the Base Erosion and Profit Shifting Action 13 (BEPS 13), enhancing tax transparency and the exchange of information with tax authorities....

We study how the OECD transfer pricing guidelines aimed at curbing tax-motivated transfer pricing practices affect investment incentives. Our theoretical model integrates the different OECD's transfer pricing methods into the tax planning cost function of an MNC to evaluate how the choice of...