Do Tax Loss Restrictions Distort Venture Capital Funding of Start-Ups?

Anti-tax loss trafficking rules disallow the use of carryforwards after a change in ownership or activity (such as significant changes turnover, employment, product portfolio). This restriction could threaten accumulated start-ups. Accounting for increased risk and reduced return on their investment, VC investors reduce funding. I analyze whether venture capital (VC) funding start-ups Europe is affected by these regulations. base my empirical analysis several case studies panel covering VC- funded companies EU28 Member States from 1999 to 2014. My findings suggest that strict anti-tax indeed impair Especially more mature high-tech industries are affected.