Asset ambiguity, reporting flexibility, and strategic declarations: evidence from audit announcements and a dividend tax cut

Kastoryano, S. ORCID: https://orcid.org/0000-0001-8500-4710 (2026) Asset ambiguity, reporting flexibility, and strategic declarations: evidence from audit announcements and a dividend tax cut. Journal of Economic Behavior & Organization, 244. 107490. ISSN 2328-7616 doi: 10.1016/j.jebo.2026.107490

Abstract/Summary

This paper studies how ambiguity in asset classification and flexibility in tax reporting enable strategic tax declarations. Using administrative data from the Netherlands, we show that a 2005 audit announcement coincided with sharp increases in declared property-related assets, particularly among the wealthiest taxpayers, in sections not directly targeted by the announcement. The study also exploits a one-year dividend tax cut in 2007, which coincided with a second audit announcement, to further examine strategic spontaneous declarations and income shifting among shareholders, particularly those with substantial company holdings. The findings reveal how taxpayers exploit reporting flexibility to declare previously hidden and hard-to-trace wealth. The results underscore how classification ambiguity can be used to strategically reallocate wealth in response to tax policy changes.

Item Type	Article
URI	https://centaur.reading.ac.uk/id/eprint/128509
Identification Number/DOI	10.1016/j.jebo.2026.107490
Refereed	Yes
Divisions	Arts, Humanities and Social Science > School of Politics, Economics and International Relations > Economics
Publisher	Elsevier
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