Luxembourg tax agreements: did the companies involved in tax agreements with the Luxembourg government do any better than others?

The Luxembourg tax agreements (LTA, agreements initiated by the Government of Luxembourg to boost investments) area financial scandal leaked for the first time to newspapers in November of 2014 by a group of journalists from the international consortium of investigative journalists. The EU authorities (state aid) have concerns that the companies involved in the LTA were able to reduce their taxes, and that these agreements were signed by multinationals only for tax avoidance purposes thereby avoiding the taxes to be paid in the EU. At the same time, multinationals claim that the LTA were used by them to pursue other management goals, such as expansion of their presence in the EU market and for investment decisions. This paper evaluates whether US multinational companies from the S%P 500, which had been involved in the LTA of 2005–2008, were able to reduce their worldwide tax obligations. By comparing results from various difference-in-difference regressions: traditional, quantile, and semiparametric, I have found that these companies may have saved more on taxes than other US multinationals on the S%P list, which in directly confirms the arguments of EU authorities about the tax aggressiveness of those companies involved in the LTA.