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Reforming the Taxation of Multijurisdictional Enterprises in Europe, “Coopetition” in a Bottom-up Federation

Marcel Gerard ()

No 1860, CESifo Working Paper Series from CESifo

Abstract: This paper investigates replacing separate taxation by consolidation and formulary apportionment in a Bottom-up Federation, when a multijurisdictional firm is mobile in various respects. The reform is decided cooperatively by all the jurisdictions or by some of them, while tax rates remain within the competence of each jurisdiction. The paper sets forth the conditions for the reform to be social welfare enhancing, while not increasing tax competition. Among them, the formula should emphasize criteria that the Multijurisdictional Enterprise cannot easily manipulate and the consolidating area should protect its capacity to levy taxes by adopting a crediting system, possibly extended to accrued capital gains, vis-à-vis the rest of the world. Policy conclusions are suggested accordingly.

Keywords: taxation of multinational enterprises; consolidation and formulary apportionment; fiscal federalism (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
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