Do tax loss restrictions distort venture capital funding of start-ups?
Anti-tax loss trafficking rules disallow the use of loss carryforwards after a change in ownership or activity (such as significant changes in turnover, employment, or the product portfolio). This restriction could threaten accumulated loss carryforwards of start-ups. Accounting for the increased ri...
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| Format: | UnknownFormat |
| Sprache: | eng |
| Veröffentlicht: |
Mannheim, Germany
ZEW - Leibniz Centre for European Economic Research
2021
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| Ausgabe: | This version: January 13th, 2021 |
| Schriftenreihe: | Discussion paper / ZEW
2021,8 |
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Tag hinzufügen | Zusammenfassung: | Anti-tax loss trafficking rules disallow the use of loss carryforwards after a change in ownership or activity (such as significant changes in turnover, employment, or the product portfolio). This restriction could threaten accumulated loss carryforwards of start-ups. Accounting for the increased risk and reduced return on their investment, VC investors could reduce their funding. I analyze whether the venture capital (VC) funding of start-ups in Europe is affected by these regulations. I base my empirical analysis on several case studies and a panel analysis covering VC- funded companies in the EU28 Member States from 1999 to 2014. My findings suggest that strict anti-tax loss trafficking rules indeed impair VC funding. Especially more mature companies and companies in high-tech industries are affected. |
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| Beschreibung: | 64 Seiten Illustrationen |