The tax attractiveness of EU locations for corporate investments: A stocktaking of past developments and recent reforms

Hannah Gundert, Katharina Nicolay, Daniela Steinbrenner and Sophia Wickel

No 23-066, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Tax incentives are a key component of governments' investment policy mix as they directly impact companies' tax burden. In this paper, we illustrate the EU's tax attractiveness as investment location over time in terms of effective average tax rates and evaluate potential tax reform options. Our quantitative assessment of recent tax policies suggests that corporate tax rate cuts, notional interest deductions and R&D incentives reduce the effective average tax rate significantly. However, we argue that targeted measures such as accelerated depreciations and R&D incentives are most suitable for creating an attractive tax environment for business investments, especially in the context of the global minimum tax.

Keywords: Mannheim Tax Index; effective tax rates; Devereux-Griffith methodology; globalminimum tax; tax incentives; investment; location attractiveness (search for similar items in EconPapers)
JEL-codes: F21 F23 H25 K34 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-eec and nep-pbe
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Related works:
Journal Article: The Tax Attractiveness of EU Locations for Corporate Investments: A Stocktaking of Past Developments and Recent Reforms (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:283587

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