IDEAS home Printed from https://ideas.repec.org/a/eee/pubeco/v87y2003i1p39-72.html
   My bibliography  Save this article

Withholding taxes or information exchange: the taxation of international interest flows

Author

Listed:
  • Huizinga, Harry
  • Nielsen, Soren Bo

Abstract

This paper considers withholding taxes and information exchange as alternative means to tax international interest income. For each regime, we consider the maximum level of taxation of foreign-source income that can be sustained as the equilibrium of a repeated game. The best regime is the one that brings the level of taxation in the repeated game closest to the cooperative level of interest taxation. Sustainable levels of taxation in either regime depend on the importance of bank profits and on the marginal cost of public funds, among other things. Simulations with the model illustrate the choice between withholding taxes and information exchange. An explicit possibility is the emergence of a mixed regime, with one country imposing a withholding tax and the other country providing information. The basic model is extended to allow for size differences between the two countries and to incorporate a third, outside country.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Huizinga, Harry & Nielsen, Soren Bo, 2003. "Withholding taxes or information exchange: the taxation of international interest flows," Journal of Public Economics, Elsevier, vol. 87(1), pages 39-72, January.
    • Handle: RePEc:eee:pubeco:v:87:y:2003:i:1:p:39-72
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0047-2727(01)00171-2
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Janeba, Eckhard & Peters, Wolfgang, 1999. "Tax Evasion, Tax Competition and the Gains from Nondiscrimination: The Case of Interest Taxation in Europe," Economic Journal, Royal Economic Society, vol. 109(452), pages 93-101, January.
    2. Julian Alworth, 1998. "Taxation and Integrated Financial Markets: The Challenges of Derivatives and Other Financial Innovations," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(4), pages 507-534, October.
    3. Sijbren Cnossen, 1996. "Company Taxes in the European Union: Criteria and Options for Reform," Fiscal Studies, Institute for Fiscal Studies, vol. 17(4), pages 67-97, November.
    4. Bacchetta, Philippe & Espinosa, Maria Paz, 1995. "Information sharing and tax competition among governments," Journal of International Economics, Elsevier, vol. 39(1-2), pages 103-121, August.
    5. Philippe Bacchetta & María Espinosa, 2000. "Exchange-of-Information Clauses in International Tax Treaties," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(3), pages 275-293, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lars Gläser & Martin Halla, 2008. "Die EU‐Zinsenrichtlinie: Ein Schuss in den Ofen?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(1), pages 83-101, February.
    2. Wolfgang Eggert & Martin Kolmar, 2002. "Residence-Based Capital Taxation in a Small Open Economy: Why Information is Voluntarily Exchanged and Why it is Not," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(4), pages 465-482, August.
    3. Huizinga, Harry & Nicodeme, Gaetan, 2004. "Are international deposits tax-driven," Journal of Public Economics, Elsevier, vol. 88(6), pages 1093-1118, June.
    4. Thomas Hemmelgarn & Gaëtan Nicodème, 2009. "Tax Co-ordination in Europe: Assessing the First Years of the EU-Savings Taxation Directive," Working Papers CEB 09-023.RS, ULB -- Universite Libre de Bruxelles.
    5. Marcel Gérard, 2004. "Combining Dutch Presumptive Capital Income Tax and US Qualified Intermediaries to Set Forth a New System of International Savings Taxation," CESifo Working Paper Series 1340, CESifo.
    6. Schwarz, Peter, 2009. "Why are countries reluctant to exchange information on interest income? Participation in and effectiveness of the EU Savings Tax Directive," International Review of Law and Economics, Elsevier, vol. 29(2), pages 97-105, June.
    7. Katarzyna Bilicka & Clemens Fuest, 2014. "With which countries do tax havens share information?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(2), pages 175-197, April.
    8. Andreas Haufler, 1999. "Prospects for co-ordination of corporate taxation and the taxation of interest income in the EU," Fiscal Studies, Institute for Fiscal Studies, vol. 20(2), pages 133-153, June.
    9. May Elsayyad, 2012. "Bargaining over Tax Information Exchange," Working Papers bargaining_over_tax_infor, Max Planck Institute for Tax Law and Public Finance.
    10. Michael Keen & Jenny Ligthart, 2006. "Incentives and Information Exchange in International Taxation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 13(2), pages 163-180, May.
    11. Marcelo Arbex & Sidney Caetano, 2016. "Welfare Implications of AEoI," Working Papers 1608, University of Windsor, Department of Economics.
    12. Luca Salvadori & José María Durán-Cabré & Alejandro Esteller-Moré, 2013. "Empirical Evidence On Tax Information Sharing Among Sub-Central Administrations," ERSA conference papers ersa13p461, European Regional Science Association.
    13. Frode Brevik & Manfred Gärtner, 2008. "Can tax evasion tame Leviathan governments?," Public Choice, Springer, vol. 136(1), pages 103-122, July.
    14. Michael Keen & Jenny Ligthart, 2006. "Information Sharing and International Taxation: A Primer," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 13(1), pages 81-110, January.
    15. Slemrod, Joel & Wilson, John D., 2009. "Tax competition with parasitic tax havens," Journal of Public Economics, Elsevier, vol. 93(11-12), pages 1261-1270, December.
    16. Michael Keen & Kai A. Konrad, 2012. "International Tax Competition and Coordination," Working Papers international_tax_competi, Max Planck Institute for Tax Law and Public Finance.
    17. Marcel GERARD & Lucia GRANELLI, 2013. "From the EU Savings Directive to the US FATCA, Taxing Cross Border Savings Income," LIDAM Discussion Papers IRES 2013007, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    18. José María Durán-Cabré & Alejandro Esteller-Moré & Luca Salvadori, 2015. "Empirical evidence on tax cooperation between sub-central administrations," Working Papers 2015/7, Institut d'Economia de Barcelona (IEB).
    19. repec:ieb:wpaper:2013/6/doc2015-7 is not listed on IDEAS
    20. Ed Westerhout, 2002. "The Capital Tax and Welfare Effects from Asymmetric Information on Equity Markets," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(3), pages 219-233, May.
    21. Marcel Gérard, 2002. "Interjurisdictional Company Taxation in Europe, the German Reform and the New EU Suggested Direction," CESifo Working Paper Series 636, CESifo.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:87:y:2003:i:1:p:39-72. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505578 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.