Prof. Dr. Dirk Schindler

Interdependency and Optimal Design of Income-shifting Regulation

Dirk Schindler is a public economist that started his career with research on optimal income taxation under uncertainty. Ten years ago, he drifted into international and corporate taxation and specialized on income shifting in multinational enterprises. Since then, he works on the interface of public finance and tax accounting.
Income shifting is still a late-breaking topic. The publication of the so-called BEPS Action Plan by the OECD has spurred research and publications on the effects of income shifting and its regulation. In recent years, Mr. Schindler and various co-authors have analyzed the role and optimal design of such income-shifting regulation. A general insight is that it is of crucial importance to take the interaction of regulatory instruments (and of income-shifting channels) into account. For example, transfer pricing is much more of a challenge for national welfare than thin capitalization, but transfer-pricing regulation is also difficult to enforce. Thus, thin-capitalization rules should have a prominent role in countries’ tax codes, particularly in form of earnings-stripping rules that limit interest deductibility relative to an earnings measure. Such a rule is less harmful for investment and indirectly targets transfer pricing. In addition, thin-capitalization rules should be accompanied by controlled-foreign-company rules, which target passive income. The latter set of rules allows for discriminating between domestic vs. foreign multinationals in order to adjust effective tax rates to the lower investment elasticity of home-based, domestic multinationals.
During his visit at CESifo, Mr. Schindler plans to extend his research on regulation by incorporating aspects of information exchange and the obligation to disclose information on international activities and income allocation in firms’ annual reports. Furthermore, he intends to dig deeper into the taxation of royalty payments (including source taxes on royalties), while also taking into account R&D expenditures and the generation of innovation.
Dirk Schindler received his doctorate and did his habilitation at the University of Konstanz, Germany. In 2012, he became a founding member of the Norwegian Center for Taxation (NoCeT). Now, he holds a full professorship in accounting and taxation at the Norwegian School of Economics (NHH) in Bergen, Norway. In spring 2019, he will become a full professor for the economics of international taxation at the Erasmus School of Economics in Rotterdam, The Netherlands.