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  3. 蝌蚪网 Journal: Economic Policy
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  5. The Big Short (Interest): Closing the Loopholes in the Dividend-Withholding Tax

蝌蚪网 Journal:
Economic Policy

ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)

The Big Short (Interest): Closing the Loopholes in the Dividend-Withholding Tax

  • Elisa Casi
  • Evelina Gavrilova
  • David Murphy
  • Floris T. Zoutman
蝌蚪网 Journal: Economic Policy (Forthcoming)

Abstract

We study the effect of stricter enforcement of the dividend-withholding tax (DWT). We focus on a 2016 Danish enforcement reform and compare Denmark to its Nordic neighbors. Throughout the Nordic stock markets, shares on loan spike sharply around dividend dates. These spikes are consistent with abuse of the DWT system. Post reform, spikes in Denmark disappear, and annual DWT revenue increases by 130 percent. Enforcement does not harm the investment climate, as measured by Danish stock returns, investment rate, and dividend yield.

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