Corporate tax harmonization in the EU

Taxing corporate income

Leon Bettendorf, Michael Devereux, Albert Van Der Horst, Simon Loretz and Ruud de Mooij

Economic Policy, 2010, vol. 25, issue 63, 537-590

Abstract: This paper explores the economic consequences of proposed EU reforms for a common consolidated corporate tax base. The reforms replace separate accounting with formula apportionment as a way to allocate corporate tax bases across countries. To assess the economic implications, we use a numerical computable general equilibrium (CGE) model for Europe. It encompasses several decision margins of firms such as marginal investment, FDI decisions, and multinational profit shifting. The simulations suggest that consolidation does not yield substantial welfare gains for Europe. The variation of effects across countries is large and depends on the choice of the apportionment formula. Consolidation with formula apportionment does not weaken incentives for tax competition. Tax competition instead offers a rationale for rate harmonization, in addition to base harmonization.— Leon Bettendorf, Michael P. Devereux, Albert van der Horst, Simon Loretz and Ruud A. de Mooij

Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (26)

Downloads: (external link)
http://hdl.handle.net/10.1111/j.1468-0327.2010.00248.x (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Corporate tax harmonization in the EU (2009)
Working Paper: Corporate tax harmonization in the EU (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:ecpoli:v:25:y:2010:i:63:p:537-590.

Access Statistics for this article

Economic Policy is currently edited by Ghazala Azmat, Roberto Galbiati, Isabelle Mejean and Moritz Schularick

More articles in Economic Policy from CEPR, CESifo, Sciences Po Contact information at EDIRC., CES Contact information at EDIRC., MSH Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().