Allowance for Corporate Equity and Tax Aggressiveness: Do Family Firms Differ from Non-Family Firms?

Abstract

The purpose of this paper is to analyse the relationship between family ownership and tax aggressiveness in private companies by taking into account a regulatory framework including an “allowance for corporate equity” system. The results, obtained from a sample of 215 private Belgian firms, suggest a positive relationship between family involvement in business and tax aggressiveness. Moreover, the introduction of the notional interests system in 2006 induces a significant raise in the corrected equity, used as a specific tax aggressiveness indicator, without distinction between Belgian private family and non-family firms. The results indicate that the origins of the family firms’ tax activism must still be analysed in depth.