Economic Effects of Simplified Procedures for Claiming Cross-Border Tax Reliefs

Fatica, Serena; Pycroft, Jonathan; Stasio, Andrzej; Stöhlker, Daniel

doi:10.2478/ntaxj-2024-0007

Figures & Tables

Average overwithheld WHT on equity and debt by residence country group.
Notes: Panel A displays the average “Overwithheld WHT” on dividends for individual investors, by group of residence country. Similarly, Panel B displays the average “Overwithheld WHT” on tradable debt for individual investors, by group of residence country.
Source: IBFD and authors’ calculations. — Average overwithheld WHT on equity and debt by residence country group. Notes: Panel A displays the average “Overwithheld WHT” on dividends for individual investors, by group of residence country. Similarly, Panel B displays the average “Overwithheld WHT” on tradable debt for individual investors, by group of residence country. Source: IBFD and authors’ calculations.

Number of bilateral tax treaties in sample data.
Notes: The figure shows the total number of bilateral tax treaties in place in our sample.
Source: IBFD a nd authors’ calculations. — Number of bilateral tax treaties in sample data. Notes: The figure shows the total number of bilateral tax treaties in place in our sample. Source: IBFD a nd authors’ calculations.

Relationship between Equity and Debt FPI and “Overwithheld WHT”.
Notes: Panel A is plotting the total stock of bilateral equity holdings on the vertical axis against “Overwithheld WHT” on equity holdings on the horizontal axis. Similarly, Panel B is plotting the total stock of bil atera l debt holdings on the vertical axis against “Overwithheld WHT” on debt holdings on the horizontal axis.
Source: IBFD and CPIS. — Relationship between Equity and Debt FPI and “Overwithheld WHT”. Notes: Panel A is plotting the total stock of bilateral equity holdings on the vertical axis against “Overwithheld WHT” on equity holdings on the horizontal axis. Similarly, Panel B is plotting the total stock of bil atera l debt holdings on the vertical axis against “Overwithheld WHT” on debt holdings on the horizontal axis. Source: IBFD and CPIS.

Effects of overwithheld WHT on debt FPI holdings

	(1)	(2)	(3)	(4)
OverwithheldWHT_mi,t	–0.0073** (0.039)	–0.0065* (0.074)	–0.0065* (0.072)	–0.0071* (0.059)
Dummy: DTT in place_im,t		–0.1199 (0.389)	0.1197 (0.389)	–0.1217 (0.407)
Rel. diff. in exchange rates_im,t		–0.0002 (0.677)	–0.0003 (0.665)	–0.0003 (0.590)
Rel. diff. in GDP growth_im,t			0.0000 (0.654)	0.0000 (0.833)
Rel. diff. in GDP (p.c.) growth_im,t			–0.0012*** (0.000)	–0.0013*** (0.000)
Rel. diff. in domestic credit to the private sectori_m,t				0.3781** (0.016)
Rel. diff. in domestic credit by banks_im,t				–0.4180*** (0.001)
No. of obs.	23,079	22,275	22,012	19,111
Pseudo R2	0.9859	0.9863	0.9864	0.9865
Home-year FE	YES	YES	YES	YES
Source-year FE	YES	YES	YES	YES
Country-pair FE	YES	YES	YES	YES

Number of observations for total deb FPI by counry-pair in sample

		Source Country
		AUT	BEL	BGR	CYP	CZE	DEU	DNK	ESP	EST	FIN	FRA	GRC	HRV	HUN	IRL	ITA	LTU	LUX	LVA	MLT	NLD	POL	PRT	ROU	SVK	SVN	SWE
Residence Country
	ALB	4	2	2	1	4	5	0	1	1	0	5	5	4	4	1	4	0	5	0	2	2	3	1	2	0	2	2
	ARG	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	AUS	12	12	3	8	10	15	11	14	15	8	12	11	6	12	13	11	6	12	12	10	14	14	13	13	7	11	12
	AUT	--	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	BEL	15	--	14	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	BGD	5	5	0	0	5	5	5	5	0	4	5	3	0	0	5	5	0	0	0	0	5	5	5	0	5	5	5
	BGR	15	15	--	14	14	15	15	14	14	15	15	15	15	15	15	15	15	15	15	14	15	15	15	15	15	15	15
	BHR	14	14	2	7	6	14	12	12	2	8	14	11	8	11	14	13	4	14	3	2	14	11	12	3	2	7	14
	BHS	9	3	3	3	3	10	6	9	3	8	12	3	3	3	12	5	3	12	3	3	12	4	8	3	3	3	6
	BLR	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6
	BMU	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	BOL	2	5	0	0	0	8	5	6	0	1	9	0	0	0	1	1	0	3	0	0	9	0	0	0	0	0	8
	BRA	15	15	6	7	7	15	15	15	6	11	15	11	7	12	15	15	5	15	5	6	15	11	15	7	7	8	15
	CAN	15	15	12	13	15	15	15	15	6	15	15	15	14	15	15	15	15	15	13	8	15	15	15	14	12	13	15
	CHE	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	9	15	15	15	15	15	9	15	15
	CHL	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	CHN	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5
	COL	15	14	10	10	10	15	12	15	10	15	15	12	10	10	15	15	10	15	10	10	15	10	12	10	10	10	15
	CRI	9	11	2	2	2	15	9	15	2	9	15	2	2	2	14	8	2	15	2	2	15	2	3	2	2	2	15
	CYM	15	14	5	8	5	15	14	15	4	12	15	10	8	6	15	15	5	15	5	5	15	8	15	6	5	7	15
	CYP	14	14	15	--	14	15	14	15	15	14	15	15	13	13	15	14	14	15	14	13	15	13	15	15	15	14	14
	CZE	15	15	11	15	--	15	15	15	13	15	15	15	15	15	15	15	8	15	8	7	15	15	15	15	15	15	15
	DEU	15	15	15	15	15	--	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	DNK	15	15	15	15	15	15	--	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	EGY	9	13	8	7	10	11	9	13	7	8	15	9	7	7	10	13	7	10	7	10	12	8	10	8	7	7	11
	ESP	13	15	5	4	4	15	13	--	5	15	15	8	3	6	14	15	3	14	6	7	15	10	15	3	3	4	15
	EST	15	15	14	14	15	15	15	15	--	15	15	15	13	15	15	15	15	15	15	7	15	15	15	15	15	15	15
	FIN	13	14	8	8	15	15	13	13	15	--	15	12	8	13	15	15	13	14	10	10	15	15	11	11	12	13	15
	FRA	15	15	15	15	15	15	15	15	15	15	--	15	15	15	15	15	15	15	14	15	15	15	15	15	15	15	15
	GBR	15	15	13	14	15	15	15	15	14	15	15	15	15	14	15	15	14	14	11	14	15	15	15	14	14	13	15
	GGY	15	15	13	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	GIB	12	14	3	9	5	15	12	14	5	11	15	7	2	5	15	12	2	15	2	6	15	5	2	4	4	7	14
	GRC	15	15	15	15	15	15	15	15	12	15	15	--	14	15	15	15	14	15	14	9	15	15	15	15	15	14	15
	HKG	15	15	14	8	6	15	15	15	11	15	15	11	14	11	15	15	10	15	14	6	15	6	15	9	12	7	15
	HND	3	3	3	3	3	3	3	3	3	3	5	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3
	HUN	15	15	12	14	15	15	15	15	10	13	15	15	15	--	15	15	11	15	12	10	15	15	15	14	11	13	15
	IDN	6	13	8	7	7	15	9	13	6	9	13	8	5	9	11	15	5	12	6	10	15	11	12	5	5	5	14
	IMN	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14
	IND	8	9	8	8	8	9	8	8	8	8	8	8	8	8	8	8	8	8	8	8	8	8	8	8	8	8	8
	IRL	15	15	7	12	14	15	15	15	5	15	15	13	7	14	--	15	6	15	6	5	15	14	14	13	5	9	15
	ISL	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	0	0	15	15	15	0	15	15	15
	ISR	15	15	4	3	10	15	15	15	0	15	15	10	5	12	15	15	7	15	6	0	15	14	12	5	8	9	15
	ITA	15	15	15	15	15	15	15	15	13	15	15	15	15	15	15	--	15	15	15	15	15	15	15	15	15	15	15
	JEY	15	15	10	15	13	15	15	15	0	15	15	15	13	14	15	15	4	15	4	7	15	15	15	11	2	8	15
	JPN	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	KAZ	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	KOR	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	KWT	4	7	0	0	0	15	8	4	0	7	14	4	0	0	13	7	0	13	0	10	14	0	7	0	0	0	7
	LBN	15	15	8	12	7	15	15	15	7	15	15	14	11	11	15	15	11	15	7	7	15	11	11	10	8	9	15
	LTU	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	--	11	11	11	11	11	11	11	11	11	11
	LUX	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	--	15	15	15	15	15	15	15	15	15
	LVA	14	14	14	14	13	14	14	14	14	14	14	14	14	14	14	14	14	14	--	3	14	14	13	14	13	13	14
	MAC	15	15	0	4	3	15	15	15	0	15	15	4	2	4	15	15	6	15	4	0	15	15	15	6	8	8	15
	MEX	0	2	0	0	0	13	1	15	0	1	13	4	0	0	6	1	0	5	0	0	14	0	0	0	0	0	1
	MKD	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4
	MLT	14	9	0	8	6	9	10	10	0	10	14	9	9	13	15	9	5	9	0	--	9	7	5	5	10	5	10
	MNG	1	2	2	1	1	1	2	1	1	1	1	1	1	1	2	1	1	1	1	1	8	1	1	1	1	1	1
	MUS	10	13	8	12	9	14	10	12	8	8	15	8	9	13	11	12	8	15	8	11	15	10	10	8	8	8	12
	MYS	15	10	4	4	6	15	13	13	4	7	15	10	4	11	15	14	3	15	3	3	15	14	3	3	4	3	15
	NLD	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	--	15	15	15	15	15	15
	NOR	15	15	9	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	10	15	15	15	10	15	15	15
	NZL	2	2	2	1	1	7	1	4	1	5	6	1	1	1	7	7	1	4	1	1	7	1	2	1	1	1	1
	PAK	0	6	0	0	0	3	0	0	0	0	6	0	0	0	0	0	0	3	0	0	6	0	0	0	0	0	0
PAN	11	12	5	7	5	14	15	13	5	12	15	10	9	12	14	14	8	15	7	7	15	10	11	6	8	8	14
PHL	1	6	2	0	0	14	4	12	0	4	14	8	1	1	12	5	3	14	0	0	15	5	0	4	0	0	8
POL	15	5	4	11	6	15	9	10	7	4	15	5	2	14	15	13	9	15	3	7	15	--	6	11	10	3	13
PRT	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	--	15	15	15	15
PSE	2	2	2	2	2	3	5	5	2	2	5	2	2	2	5	5	2	2	2	2	3	5	2	2	2	2	3
ROU	15	8	14	4	11	15	8	14	2	12	15	15	12	14	14	14	3	14	2	2	15	14	8	--	2	13	13
RUS	14	14	14	15	13	14	15	15	11	13	15	15	15	14	15	15	12	15	12	12	15	12	11	13	14	11	15
SAU	7	7	7	7	6	7	7	7	6	7	7	7	7	7	7	7	7	7	6	6	7	7	6	7	6	6	7
SGP	14	10	0	1	6	13	7	11	0	8	7	9	2	7	14	12	1	15	0	0	15	13	7	4	0	0	12
SLV	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2
SVK	15	15	15	14	15	15	13	15	8	14	15	15	15	15	15	15	9	15	12	8	15	15	13	15	--	15	15
SVN	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	--	11
SWE	15	15	14	14	15	15	15	15	15	15	15	15	14	14	15	15	15	15	15	14	15	14	15	14	14	14	--
THA	13	15	7	10	9	15	15	15	4	13	15	9	8	9	15	15	11	15	8	9	15	15	12	11	8	13	15
TUR	15	14	14	11	11	15	11	12	11	15	15	12	11	11	15	14	11	15	11	11	15	12	15	12	11	11	11
UKR	0	0	0	9	0	0	0	0	0	0	0	0	0	0	0	0	0	1	0	0	6	1	0	0	0	0	0
URY	15	15	8	10	11	15	15	15	4	15	15	15	11	15	15	15	5	15	9	4	15	13	13	12	4	12	15
USA	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	14	15	15	15	15	15	15	15	15
XKX	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10
ZAF	9	13	0	0	1	15	7	13	0	6	15	3	0	2	15	12	0	15	0	3	15	6	2	0	0	0	9

Number of observations or total equty FPI by country-pair in sample

		Source Country
		AUT	BEL	BGR	CYP	CZE	DEU	DNK	ESP	EST	FIN	FRA	GRC	HRV	HUN	IRL	ITA	LTU	LUX	LVA	MLT	NLD	POL	PRT	ROU	SVK	SVN	SWE
Residence Country
	ALB	0	3	0	0	0	0	0	0	0	0	0	0	0	0	0	4	0	0	0	0	3	0	0	0	0	0	3
	ARG	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	AUS	10	12	15	5	11	13	11	14	4	8	11	10	12	11	13	11	14	13	15	8	14	13	14	8	15	13	12
	AUT	--	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	BEL	15	--	12	15	15	15	15	15	9	15	15	15	10	15	15	15	11	15	11	15	15	15	15	15	14	12	15
	BGR	15	15	--	14	13	15	13	15	13	15	15	14	14	14	15	14	13	15	13	13	15	13	13	15	13	13	15
	BHR	9	14	8	6	2	14	10	12	2	12	14	6	2	2	14	13	3	14	2	2	14	10	11	8	3	2	14
	BHS	4	3	3	3	3	3	3	3	3	3	3	3	3	8	3	3	7	3	3	4	3	3	3	3	3	3	3
	BLR	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6	6
	BMU	15	14	15	15	15	15	15	14	15	15	15	14	15	15	15	15	15	15	15	14	15	15	15	15	15	15	14
	BOL	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	2	0	0	0	0	0	0	0	0	0	0
	BRA	15	15	10	12	12	15	15	15	10	15	15	13	8	14	15	15	6	15	8	12	15	15	15	10	8	6	15
	CAN	15	15	4	15	15	15	15	15	9	15	15	15	15	15	15	15	4	15	4	13	15	15	15	11	7	12	15
	CHE	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	8	15	15	15	15	15	8	15	15
	CHL	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	CHN	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	5	3	5	5	5
	COL	12	11	10	10	10	12	11	12	10	13	12	10	10	10	15	12	10	15	10	10	12	10	11	10	10	10	12
	CRI	2	5	1	2	1	15	4	14	1	12	14	13	1	11	10	9	1	14	1	1	14	1	2	1	1	1	14
	CYM	6	6	5	7	5	14	7	12	5	8	11	6	4	5	12	10	4	15	5	5	14	6	10	5	4	5	9
	CYP	13	15	14	--	13	15	14	15	15	13	15	15	15	15	15	15	15	14	15	14	15	12	15	14	15	15	13
	CZE	15	15	8	15	--	15	15	15	13	15	15	15	14	15	15	15	7	15	7	12	15	15	15	15	15	15	15
	DEU	15	15	15	15	15	--	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	DNK	15	15	15	15	15	15	--	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	EGY	7	8	7	8	7	13	7	10	7	7	15	7	7	7	10	15	7	12	7	10	14	10	7	9	7	7	7
	ESP	11	15	5	4	3	15	9	--	2	15	15	4	4	4	15	15	7	15	7	3	15	6	15	3	7	3	15
	EST	15	13	15	15	15	13	15	14	--	15	15	11	13	15	15	12	15	15	15	14	15	15	7	15	12	15	15
	FIN	13	14	5	10	9	15	13	13	15	--	15	14	4	5	15	15	13	15	13	6	15	14	13	8	0	5	15
	FRA	15	15	14	15	15	15	15	15	14	15	--	15	15	15	15	15	10	15	9	14	15	15	15	15	12	15	15
	GBR	15	15	13	14	15	15	15	15	14	15	15	15	15	15	15	15	15	14	13	15	15	15	15	14	14	14	15
	GGY	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	GIB	9	10	2	6	7	15	12	14	2	11	15	7	8	2	14	12	2	15	3	5	14	7	8	3	2	2	14
	GRC	15	15	15	15	15	15	15	15	11	15	15	--	13	15	15	15	13	15	13	9	15	15	15	15	14	14	15
	HKG	15	15	15	8	8	15	15	15	14	15	15	11	15	11	15	13	15	15	15	12	15	6	15	12	15	11	15
	HND	3	5	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3
	HUN	15	15	15	13	15	15	15	15	15	15	15	15	14	--	15	15	11	15	13	10	15	15	12	15	11	13	15
	IDN	4	11	2	4	2	11	5	13	0	10	11	2	3	7	7	11	0	11	0	4	12	8	8	1	0	2	7
	IMN	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14	14
	IND	8	14	8	9	9	13	12	11	8	8	14	8	8	8	14	9	8	13	8	10	13	10	8	8	8	8	11
	IRL	15	15	7	12	14	15	15	15	5	15	15	13	7	14	--	15	6	15	6	5	15	14	14	13	6	9	15
	ISL	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	0	0	15	15	15	0	15	15	15
	ISR	15	15	0	3	0	15	15	15	0	15	15	14	0	7	15	15	0	15	0	2	15	5	15	0	0	0	15
	ITA	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	--	10	15	10	15	15	15	15	13	10	15	15
	JEY	15	15	8	15	15	15	15	15	1	15	15	15	11	15	15	15	4	15	11	7	15	15	15	12	10	5	15
	JPN	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	KAZ	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	KOR	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	KWT	4	14	0	0	0	15	8	8	0	14	15	6	0	0	14	6	0	15	0	15	15	0	12	0	0	0	15
	LBN	15	15	10	14	7	15	15	15	7	15	15	14	7	8	15	15	7	15	7	7	15	7	15	7	7	7	15
	LTU	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	--	11	11	11	11	11	11	11	11	11	11
	LUX	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	--	15	15	15	15	15	15	15	15	15
	LVA	11	11	9	10	9	11	11	10	11	11	11	10	6	11	11	10	11	11	--	10	11	11	10	4	5	6	11
	MAC	15	15	0	5	3	15	15	15	0	15	15	6	0	4	15	15	0	15	0	1	15	7	15	0	0	0	15
	MEX	6	7	0	0	0	14	6	15	0	11	14	2	0	0	15	13	0	15	0	0	14	0	6	0	0	0	13
	MKD	4	4	4	4	4	4	4	4	4	44	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4
	MLT	6	6	3	3	4	9	4	6	2	7	14	4	4	9	15	9	7	9	3	--	7	6	3	6	9	7	6
	MNG	9	3	9	6	9	10	9	8	3	99	9	9	9	9	8	1	9	8	2	7	9	1	1	1	3	1
	MUS	11	15	8	14	9	15	11	13	8	13	15	12	11	13	15	14	8	15	8	12	15	13	10	11	8	9	15
	MYS	14	15	12	13	11	15	15	15	3	15	15	14	3	10	15	15	3	15	3	3	15	14	14	3	3	4	15
	NLD	15	15	15	15	15	15	15	15	14	15	15	15	15	15	15	15	14	15	15	15	--	15	14	15	15	15	15
	NOR	15	15	12	15	15	15	15	15	13	15	15	15	15	15	15	15	15	15	15	15	15	15	15	13	5	15	15
	NZL	2	3	0	2	1	13	6	4	0	3	10	1	0	1	6	7	0	2	0	0	8	0	1	0	0	0	3
	PAK	3	15	0	0	0	2	2	0	0	05	0	0	0	0	0	0	6	0	0	7	0	0	0	0	0	2
	PAN	5	11	0	1	0	11	11	13	0	8	12	7	3	3	15	11	4	14	2	3	15	2	4	1	2	3	7
PHL	0	3	0	0	0	11	1	7	0	18	1	0	0	7	1	0	12	0	0	15	0	0	0	0	0	4
POL	15	4	4	10	6	15	11	10	7	5	15	5	2	14	15	13	9	15	5	7	15	--	6	12	10	3	13
PRT	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	--	15	15	15	15
PSE	3	3	3	3	3	3	3	3	3	33	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3	3
ROU	15	13	14	13	12	15	7	13	1	10	15	14	6	14	13	15	2	15	1	1	15	14	7	--	2	12	9
RUS	15	14	11	15	11	15	15	15	11	15	14	15	11	11	15	14	10	15	12	11	15	11	10	11	14	11	15
SAU	7	7	4	5	7	7	7	7	5	77	7	4	7	7	7	4	7	4	5	7	7	7	4	4	4	7
SGP	8	4	0	7	4	12	4	12	0	44	7	0	6	15	8	0	15	0	0	6	5	13	0	0	0	7
SVK	15	15	7	10	15	15	14	15	7	13	15	9	15	15	15	15	7	15	9	9	15	15	10	10	--	13	14
SVN	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	--	11
SWE	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	14	15	15	15	15	14	15	--
THA	10	15	4	8	4	15	11	12	4	11	15	12	4	4	15	15	4	15	4	5	12	5	7	4	4	4	11
TUR	11	12	11	11	11	15	14	13	12	15	15	13	11	11	13	14	11	15	11	11	15	11	13	11	11	11	15
UKR	0	0	0	0	0	0	0	0	0	03	0	0	0	0	0	0	0	7	0	0	0	0	0	0	0	0
URY	15	15	7	8	8	15	14	15	1	14	15	14	8	14	15	15	2	15	5	1	15	12	11	9	1	9	15
USA	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	14	15	15
XKX	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10
ZAF	15	15	0	10	8	15	15	15	6	15	15	15	4	13	15	15	0	15	0	13	15	11	15	8	0	2	15

Number of years with tax treaty in place by country-pair in sample

		Source Country
		AUT	BEL	BGR	CYP	CZE	DEU	DNK	ESP	EST	FIN	FRA	GRC	HRV	HUN	IRL	ITA	LTU	LUX	LVA	MLT	NLD	POL	PRT	ROU	SVK	NAS	SWE
Residence Country
	ALB	11	15	15	0	15	8	0	9	2	0	14	15	15	15	8	15	0	0	11	15	14	15	0	15	0	10	15
	ARG	4	15	0	0	0	15	15	15	0	15	15	0	0	0	0	15	0	0	0	0	15	0	0	0	0	0	15
	AUS	15	15	0	0	15	15	15	15	0	15	15	0	0	15	15	15	0	0	0	15	15	15	0	15	15	0	15
	AUT	--	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	14	15	12	15	15	15	15	15	15	15	15
	BEL	15	--	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	BGD	0	15	0	0	0	15	15	0	0	0	15	0	0	0	0	15	0	0	0	0	15	15	0	15	0	0	15
	BGR	15	15	--	15	15	15	15	15	11	15	15	15	15	15	15	15	13	15	15	15	15	15	15	15	15	15	15
	BHR	9	5	9	3	7	0	0	0	6	0	15	0	0	4	10	0	0	9	0	7	10	0	3	0	0	0	0
	BHS	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
	BLR	15	15	15	15	15	15	15	15	15	11	15	0	15	15	10	15	15	0	15	0	15	15	0	15	15	8	15
	BMU	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
	BOL	0	0	0	0	0	15	0	15	0	0	15	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	15
	BRA	15	15	0	0	15	1	15	15	0	15	15	0	0	15	0	15	0	15	0	0	15	0	15	0	15	0	15
	CAN	15	15	15	15	15	15	15	15	15	15	15	9	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	CHE	15	15	15	4	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	7	15	15	15	15	15	15	15
	CHL	4	9	0	0	3	0	15	15	0	0	13	0	15	0	11	3	0	0	0	0	0	15	11	0	0	0	14
	CHN	15	15	15	15	15	15	15	15	15	15	15	14	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	COL	0	0	0	0	4	0	0	11	0	0	0	0	0	0	0	0	0	0	0	0	0	0	4	0	0	0	0
	CRI	0	0	0	0	0	3	0	9	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
	CUW	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	4	0	0	0	0	0	0
	CYM	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
	CYP	15	15	15	--	15	15	15	5	6	6	15	15	0	15	15	15	5	1	3	15	0	15	6	15	15	15	15
	CZE	15	15	15	15	--	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	DEU	15	15	15	15	15	--	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	DNK	15	15	15	15	15	15	--	4	15	15	4	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	EGY	15	15	15	15	15	15	15	13	0	15	15	13	0	15	6	15	0	0	0	15	15	15	0	15	0	0	15
	ESP	15	15	15	5	15	15	4	--	15	15	15	15	13	15	15	15	15	15	15	13	15	15	15	15	15	15	15
	EST	15	15	11	6	15	15	15	15	--	15	15	11	15	15	15	15	15	12	15	15	15	15	15	14	13	13	15
	FIN	15	15	15	6	15	15	15	15	15	--	15	15	15	15	15	15	15	15	15	15	15	15	14	15	15	15	15
	FRA	15	15	15	15	15	15	4	15	15	15	--	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	GBR	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	12	15	15	15	15	15	15	15
	GGY	0	0	0	4	0	0	0	0	0	0	0	0	0	0	0	0	0	5	0	6	0	0	0	0	0	0	0
	GIB	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
	GRC	15	15	15	15	15	15	15	15	11	15	15	--	15	15	15	15	14	15	14	11	15	15	15	15	15	15	15
	HKG	8	15	0	0	7	0	0	7	0	1	8	0	0	8	8	4	0	12	2	7	8	0	7	3	0	0	0
	HND	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
	HRV	15	15	15	0	15	15	15	13	15	15	15	15	--	15	15	15	15	3	15	15	15	15	4	15	15	14	15
	HUN	15	15	15	15	15	15	15	15	15	15	15	15	15	--	15	15	15	15	15	15	15	15	15	15	15	15	15
	IDN	15	15	15	0	15	15	15	15	0	15	15	0	7	15	0	15	0	15	0	0	15	15	12	15	15	0	15
	IMN	0	0	0	0	0	0	0	0	10	0	0	0	0	0	0	0	0	5	0	9	0	0	0	0	0	0	0
	IND	15	15	15	15	15	15	15	15	7	15	15	15	4	15	15	15	7	10	6	15	15	15	15	15	15	14	15
	IRL	15	15	15	15	15	15	15	15	15	15	15	15	15	15	--	15	15	15	15	10	15	15	15	15	15	15	15
	ISL	2	15	0	5	15	15	15	15	15	15	15	11	8	13	15	11	15	15	15	13	15	15	15	11	15	7	15
	ISR	15	15	4	3	10	15	15	15	0	15	15	10	5	12	15	15	7	15	6	0	15	14	12	5	8	9	15
	ITA	15	15	15	15	15	15	15	15	13	15	15	15	15	15	15	--	15	15	15	15	15	15	15	15	15	15	15
	JEY	15	15	10	15	13	15	15	15	0	15	15	15	13	14	15	15	4	15	4	7	15	15	15	11	2	8	15
	JPN	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	KAZ	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	KOR	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15
	KWT	4	7	0	0	0	15	8	4	0	7	14	4	0	0	13	7	0	13	0	10	14	0	7	0	0	0	7
	LBN	15	15	8	12	7	15	15	15	7	15	15	14	11	11	15	15	11	15	7	7	15	11	11	10	8	9	15
	LTU	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	--	11	11	11	11	11	11	11	11	11	11
	LUX	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	--	15	15	15	15	15	15	15	15	15
	LVA	14	14	14	14	13	14	14	14	14	14	14	14	14	14	14	14	14	14	--	3	14	14	13	14	13	13	14
	MAC	15	15	0	4	3	15	15	15	0	15	15	4	2	4	15	15	6	15	4	0	15	15	15	6	8	8	15
	MEX	0	2	0	0	0	13	1	15	0	1	13	4	0	0	6	1	0	5	0	0	14	0	0	0	0	0	1
	MKD	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4	4
	MLT	14	9	0	8	6	9	10	10	0	10	14	9	9	13	15	9	5	9	0	--	9	7	5	5	10	5	10
	MNG	1	2	2	1	1	1	2	1	1	1	1	1	1	1	2	1	1	1	1	1	8	1	1	1	1	1	1
	MUS	10	13	8	12	9	14	10	12	8	8	15	8	9	13	11	12	8	15	8	11	15	10	10	8	8	8	12
	MYS	15	10	4	4	6	15	13	13	4	7	15	10	4	11	15	14	3	15	3	3	15	14	3	3	4	3	15
	NLD	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	--	15	15	15	15	15	15
	NOR	15	15	9	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	10	15	15	15	10	15	15	15
NZL	2	2	2	1	1	7	1	4	1	5	6	1	1	1	7	7	1	4	1	1	7	1	2	1	1	1	1
PAK	0	6	0	0	0	3	0	0	0	0	6	0	0	0	0	0	0	3	0	0	6	0	0	0	0	0	0
PAN	11	12	5	7	5	14	15	13	5	12	15	10	9	12	14	14	8	15	7	7	15	10	11	6	8	8	14
PHL	1	6	2	0	0	14	4	12	0	4	14	8	1	1	12	5	3	14	0	0	15	5	0	4	0	0	8
POL	15	5	4	11	6	15	9	10	7	4	15	5	2	14	15	13	9	15	3	7	15	--	6	11	10	3	13
PRT	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	--	15	15	15	15
PSE	2	2	2	2	2	3	5	5	2	2	5	2	2	2	5	5	2	2	2	2	3	5	2	2	2	2	3
ROU	15	8	14	4	11	15	8	14	2	12	15	15	12	14	14	14	3	14	2	2	15	14	8	--	2	13	13
RUS	14	14	14	15	13	14	15	15	11	13	15	15	15	14	15	15	12	15	12	12	15	12	11	13	14	11	15
SAU	7	7	7	7	6	7	7	7	6	7	7	7	7	7	7	7	7	7	6	6	7	7	6	7	6	6	7
SGP	14	10	0	1	6	13	7	11	0	8	7	9	2	7	14	12	1	15	0	0	15	13	7	4	0	0	12
SLV	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2	2
SVK	15	15	15	14	15	15	13	15	8	14	15	15	15	15	15	15	9	15	12	8	15	15	13	15	--	15	15
SVN	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	11	--	11
SWE	15	15	14	14	15	15	15	15	15	15	15	15	14	14	15	15	15	15	15	14	15	14	15	14	14	14	--
THA	13	15	7	10	9	15	15	15	4	13	15	9	8	9	15	15	11	15	8	9	15	15	12	11	8	13	15
TUR	15	14	14	11	11	15	11	12	11	15	15	12	11	11	15	14	11	15	11	11	15	12	15	12	11	11	11
UKR	0	0	0	9	0	0	0	0	0	0	0	0	0	0	0	0	0	1	0	0	6	1	0	0	0	0	0
URY	15	15	8	10	11	15	15	15	4	15	15	15	11	15	15	15	5	15	9	4	15	13	13	12	4	12	15
USA	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	15	14	15	15	15	15	15	15	15	15
XKX	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10	10
ZAF	9	13	0	0	1	15	7	13	0	6	15	3	0	2	15	12	0	15	0	3	15	6	2	0	0	0	9

Sectoral effects of overwithheld WHT on debt FPI holdings

	(1) All investors	(2) Financial institutions	(3) Other investors (NFC, HH, NPISHs)
OverwithheldWHT_mi,t	–0.0114** (0.049)	–0.0147*** (0.008)	0.0016 (0.810)
Dummy: DTT in place_im,t	0.1634 (0.272)	0.2297 (0.172)	–0.6556 (0.318)
Rel. diff. in exchange rates_im,t	–0.0007 (0.283)	–0.0018** (0.040)	0.0007 (0.671)
Rel. diff. in GDP growth_im,t	0.0000 (0.827)	0.0001 (0.474)	–0.0005** (0.043)
Rel. diff. in GDP (p.c.) growth_im,t	–0.0003 (0.649)	–0.0008 (0.134)	0.0068 (0.128)
No. of obs.	12,021	12,021	12,021
Pseudo R2	0.9874	0.9874	0.9746
Home-year FE	YES	YES	YES
Source-year FE	YES	YES	YES
Country-pair FE	YES	YES	YES

Effects of overwithheld WHT on equity FPI holdings

	(1)	(2)	(3)	(4)
OverwithheldWHT_mi,t	–0.0151*** (0.008)	–0.0162*** (0.004)	–0.0162*** (0.004)	–0.0168*** (0.008)
Dummy: DTT in place_im,t		0.0182 (0.914)	0.0172 (0.919)	–0.0034 (0.985)
Rel. diff. in exchange rates_im,t		–0.0010 (0.244)	–0.0010 (0.243)	–0.0011 (0.198)
Rel. diff. in GDP growth_im,t			0.0001* (0.094)	0.0001* (0.097)
Rel. diff. in GDP (p.c.) growth_im,t			–0.0000 (0.864)	–0.0000 (0.956)
Rel. diff. in domestic credit to the private sector_im,t				0.0910 (0.508)
Rel. diff. in domestic credit by banks_im,t				–0.3534*** (0.000)
No. of obs.	22,302	21,477	21,237	18,581
Pseudo R2	0.9937	0.9941	0.9941	0.9946
Home-year FE	YES	YES	YES	YES
Source-year FE	YES	YES	YES	YES
Country-pair FE	YES	YES	YES	YES

Sectoral effects of overwithheld WHT on equity FPI holdings

	(1) All investors	(2) Financial institutions	(3) Other investors (NFC, HH, NPISHs)
OverwithheldWHT_mi,t	–0.0131* (0.087)	–0.0104* (0.088)	–0.0255* (0.068)
Dummy: DTT in place_im,t	0.4052 (0.128)	0.2479 (0.246)	0.9414** (0.025)
Rel. diff. in exchange rates_im,t	–0.0006 (0.608)	0.0016 (0.538)	–0.0036 (0.240)
Rel. diff. in GDP growth_im,t	0.0001 (0.190)	0.0001 (0.143)	0.0000 (0.573)
Rel. diff. in GDP (p.c.) growth_im,t	–0.0009 (0.206)	–0.0012* (0.079)	–0.0003 (0.691)
No. of obs.	10,244	10,244	10,244
Pseudo R2	0.9965	0.9962	0.9948
Home-year FE	YES	YES	YES
Source-year FE	YES	YES	YES
Country-pair FE	YES	YES	YES

Descriptive statistics of bilateral FPI stocks

	Obs.	Mean	Std. Dev.	Median	Max.
Total bilateral equity* FPI (mio. Dollar)*	22,302	4,256.6	25,062.5	14.8	697,804.7
(1) Central Bank	8,687	17.6	260.9	0	8,553.6
(2) Depository-taking Corporations	13,318	194.9	1,173	0	25,822.1
(3) Other Financial Corporations	15,375	2,596.9	16,923.4	5.9	438,339
(4) General Government	11,320	194.3	1,484.8	0	43,860.9
(5a) Nonfinancial Corporations	10,319	244.8	2,480.1	0	110,203
(5b) Households	9,805	1,019.4	11,893.5	0.2	317,544.7
(5c) NPISHs	7,391	40.5	348.4	0	11,247.5
Total bilateral debt* FPI (mio. Dollar)*	23,079	6,012	24,300.6	57.6	343,959.2
(1) Central Bank	10,452	354.8	2,345.1	0	71,254.7
(2) Depository-taking Corporations	16,420	1766	8446	4	176,231
(3) Other Financial Corporations	16,081	3,462.9	15,655.3	14.9	238,400.9
(4) General Government	13,554	244.3	1,695.1	0	45,884.8
(5a) Nonfinancial Corporations	11,391	127.1	891.7	0	27,860
(5b) Households	10,871	178.9	1,345.8	0.1	3,3468
(5c) NPISHs	8,833	28.7	206.2	0	4,968.9

Variable Definitions

OverwithheldWHT_mi,t	Overwithheld withholding tax (separate reporting of debt and equity holding) received from a company in country i by an investor residing in country m according to country-pair specific double tax treaty in year t, in percentage points. Source: IBFD and authors’ computations.
ΔOverwithheldWHT_mi,t	Year-on-year changes in OverwithheldWHT_mi,t (separate reporting of debt and equity holding).
FPI_im,t	Stock of FPI holdings (separate reporting of debt and equity holding) in country i of investors residing in country m in year t. Source: CPIS.
Dummy: DTT inplaceim,t	Dummy variable that is equal to 1 when countries i and m have a double-tax treaty in place in year t. Source: IBFD and authors’ calculations.
Rel. diff. in exchangerates_im,t	Difference in exchange rates between countries i and m in year t, divided by the exchange rate in country m in year t. Source: World Development Indicators and authors’ calculations.
Rel. diff. in GDPgrowth_im,t	Difference in GDP growth between countries i and m in year t, divided by GDP growth in country m in year t. Source: World Development Indicators and authors’ calculations.
Rel. diff. in GDP (p.c.)growth_im,t	Difference in GDP per capita growth between countries i and m in year t, divided by GDP growth per capita in country m in year t. Source: World Development Indicators and authors’ calculations.
Rel. diff. in domestic credit to the private sector_im,t	Difference in domestic credit to the private sector between countries i and m in year t, divided by domestic credit to the private sector in country m in year t. Source: World Development Indicators and authors’ calculations.
Rel. diff. in domestic credit by banks_im,t	Difference in domestic credit by banks between countries i and m in year t, divided by domestic credit by banks in country m in year t. Source: World Development Indicators and authors’ calculations.

Descriptive statistics of bilateral data: Correlation matrix

	[1]	[2]	[3]	[4]	[5]	[6]	[7]	[8]
[1] Y-o-Y changes in Overwithheld WHTs (equity)	1
[2] Y-o-Y changes in Overwithheld WHTs (debt)	0.1733	1
[3] Dummy: DTT in placei_im,t	0.0160	0.0208	1
[4] Rel. diff. in exchange rates_im,t	0.0060	0.0083	–0.0674	1
[5] Rel. diff. in GDP growth_im,t	-0.0042	0.0016	–0.0059	0.0008	1
[6] Rel. diff. in GDP (p.c.) growth_im,t	–0.0152	–0.0041	0.0344	–0.0487	0.0161	1
[7] Rel. diff. in domestic credit to the private sector_im,t	0.0099	–0.0007	–0.1609	0.0925	–0.0010	–0.0421	1
[8] Rel. diff. in domestic credit by banks_im,t	0.0077	0.0004	–0.1578	0.1111	0.0000	–0.0387	0.9842	1

Comparison of original and bias-corrected estimates

	(A) Equity FDI		(B) Debt FDI
	(Original)	(Bias-corrected)	(Original)	(Bias-corrected)
OverwithheldWHT_mi,t	–0.0151*** (0.0057)	–0.0157** (0.0067)	–0.0073** (0.0036)	–0.0081** (0.0041)
No. of obs.	22,302		23,079
Home-year FE	YES		YES
Source-year FE	YES		YES
Country-pair FE	YES		YES

Economic Effects of Simplified Procedures for Claiming Cross-Border Tax Reliefs

Figures & Tables

Figure 1:

Figure 2:

Figure 3:

Effects of overwithheld WHT on debt FPI holdings

Number of observations for total deb FPI by counry-pair in sample

Number of observations or total equty FPI by country-pair in sample

Number of years with tax treaty in place by country-pair in sample

Sectoral effects of overwithheld WHT on debt FPI holdings

Effects of overwithheld WHT on equity FPI holdings

Sectoral effects of overwithheld WHT on equity FPI holdings

Descriptive statistics of bilateral FPI stocks

Variable Definitions

Descriptive statistics of bilateral data: Correlation matrix

Comparison of original and bias-corrected estimates

Paradigm

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