Taxes and a Country's Location Attractiveness for Start-ups - General Binomial Model

Taxes and a Country's Location Attractiveness for Start-upsA Model-Based Analysis of National Tax Law DifferencesStart-ups are characterized by an over-time declining high initial economic risk and the generation of initial losses. Since taxes affect a start-up’s economic development and the offset of accumulated losses against profits results in tax savings, national differences in tax loss offset regulations and total statutory tax rates influence a country’s attractiveness as a location for start-ups. Because of this, we analyze what systematic effects national differences in tax loss offset regulations and total statutory tax rates have on a country’s attractiveness as a start-up location. To represent a start up’s uncertain economic development we use this general binomial model complemented by a novel exponential trend risk development function to integrate a start-up’s economic characteristics. Because of their geographic, linguistic, cultural, and economic proximity and the representation of common international tax law differences, we focus the analysis on German and Austrian tax laws. We found that national differences in the loss-offset direction, in the limitation of the loss-offset height, and in total statutory tax rates constitute substantial aspects of a country’s attractiveness as a start-up location. Our findings further indicate that location comparisons that solely focus on total statutory tax rates and neglect tax loss-offset regulations are insufficient for the evaluation by start-ups of a country’s location attractiveness due to their economic characteristics. Tax loss-offset regulations distort location decisions that are solely based on a comparison of total statutory tax rates. Finally, we found that a start-up’s risk characteristics and the height of its initial investment play a crucial role in determining the degree of distortion.税收与一国对初创企业的选址吸引力：基于国家税法差异的模型分析 初创企业的典型特征为：初始阶段经济风险极高，且该风险随时间推移逐步降低，同时会产生初始经营亏损。由于税收会影响初创企业的经济发展，且累计亏损抵减利润可带来税收节省，因此各国在亏损结转抵扣规则（tax loss offset regulations）与法定总税率（total statutory tax rates）上的差异，会影响该国作为初创企业选址的吸引力。基于此，本文旨在分析各国在亏损结转抵扣规则与法定总税率上的差异，对该国作为初创企业选址的吸引力所产生的系统性影响。为刻画初创企业不确定的经济发展路径，本文采用通用二项式模型（binomial model），并结合全新的指数趋势风险发展函数（exponential trend risk development function），以整合初创企业的经济特征。鉴于德国与奥地利在地理、语言、文化与经济层面的邻近性，且二者能够体现国际税法差异的典型特征，本文将分析聚焦于德奥两国的税法体系。研究发现，各国在亏损结转抵扣方向、亏损结转抵扣限额以及法定总税率上的差异，是影响该国作为初创企业选址吸引力的核心因素。研究结果进一步表明，由于初创企业自身的经济特征，仅关注法定总税率而忽略亏损结转抵扣规则的选址对比，不足以让初创企业准确评估一国的选址吸引力。亏损结转抵扣规则会扭曲仅以法定总税率对比为依据的选址决策。最后，本文发现初创企业的风险特征与初始投资规模，是决定该扭曲程度的关键因素。