Scandinavian Working Papers in Economics
Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy
No 2025:3: Firm-level responses to a canceled dividend tax increase
Johan Holmberg () and Håkan Selin ()
Additional contact information
Johan Holmberg: Department of Economics at Umea School of Business, Economics and Statistics, and Uppsala Center for Fiscal Studies (UCFS)
Håkan Selin: Institute for Evaluation of Labour Market and Education Policy (IFAU) and UCFS
Abstract: An increase in the dividend tax on shares of Swedish closely-held corporations, scheduled for January 1, 2018, was canceled at short notice. In a difference-in-difference setting, we examine how firms reacted to the canceled reform. We find that dividends payments increased in 2016 and 2017 and declined sharply in 2018, especially for cash-rich firms. However, cash holdings recovered quickly in 2018 and 2019, and the excessive dividend payouts did not affect investments. Paradoxically, the discontinued reform implied an additional tax burden for those engaged in intertemporal tax arbitrage.
Keywords: Owner level taxes; tax planning; investments; employment
Language: English
73 pages, April 8, 2025
Full text files
wp-2025-3-firm-level...end-tax-reform.-.pdfFull text
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