Kap. 01

• ex ante (before start of project)

• maximize the after-tax returns (when implementing the decision rule)

• ex post (after implementing project/finacing structure)

• reduce tax payments of an ongoing project

1. classical tax system -> full double taxation

2. shareholder-relief system -> relief on dividend income (either by a reduced flat tax or exemption of a part of dividends)

3. Imputation system -> dividends are fully taxable at owner’s level, but shareholder receives a tax credit which is either full amount of corporate tax or part of corporate tax

   -> full or partial imputation system

• discrimination of foreigners, because they can’t use the tax credits -> disadvantage for companies which are seeking outside capital

• imputation systems are administratively complex

1. interal equity

2. debt

3. external equity

1. financing public goods and services

2. redistribution of wealth

3. encouraging activities that are in public interest (z.B. R&D)

parent tax rate > subsidiary tax rate -> equity financing (exemption of dividends)

parent tax rate < subsidiary tax rate -> debt financing (debt-tax shield)