Withholding-Tax Non-Compliance: The Case of Cum-Ex Stock-Market Transactions

Other publication type


Publication Details

Author(s): Büttner T, Holzmann C, Kreidl F, Scholz H
Publication year: 2019
Language: English


Abstract

This paper explores withholding tax non-compliance in the context of
dividend taxation. It focuses on a specific type of stock-market
transactions around ex-dividend dates, so-called “cum-ex” trades, which
have caused considerable revenue losses due to illegitimate tax refunds
in Germany and other countries. We use a stylized model of the
stock-market equilibrium to analyze the incentives of traders on the
German stock market and find that cum-ex trades differ from tax
arbitrage exploiting imperfections in the administration of the
withholding tax: Cum-ex trades are only profitable for both buyer and
seller in the presence of collusive tax fraud. Our analysis of market
data for publicly traded German stocks from 2009 to 2015 confirms the
theoretical predictions. We find an increase in transaction numbers
shortly before ex-dividend dates due to cum-ex trading. In line with the
collusion hypothesis, effects on stock-market prices are not found.


FAU Authors / FAU Editors

Büttner, Thiess Prof. Dr.
Lehrstuhl für Volkswirtschaftslehre, insbesondere Finanzwissenschaft
Holzmann, Carolin
Lehrstuhl für Volkswirtschaftslehre, insbesondere Finanzwissenschaft
Kreidl, Felix
Lehrstuhl für Betriebswirtschaftslehre, insbesondere Finanzierung und Banken
Scholz, Hendrik Prof. Dr.
Lehrstuhl für Betriebswirtschaftslehre, insbesondere Finanzierung und Banken


How to cite

APA:
Büttner, T., Holzmann, C., Kreidl, F., & Scholz, H. (2019). Withholding-Tax Non-Compliance: The Case of Cum-Ex Stock-Market Transactions.

MLA:
Büttner, Thiess, et al. Withholding-Tax Non-Compliance: The Case of Cum-Ex Stock-Market Transactions. 2019.

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Last updated on 2019-27-03 at 16:23