Fuest, Clemens, Hemmelgarn, Thomas and Ramb, Fred (2007) How would the introduction of an EU-wide formula apportionment affect the size and the distribution of the corporate tax base? An analysis based on German multinationals. International Tax and Public Finance, 14 (5). pp. 605-626.
This paper analyses the effects of introducing a common EU tax base with formula apportionment on the size of the EU-wide tax base and on the distribution of the tax base between the EU member countries. We use a combined dataset of Deutsche Bundesbank's Foreign Direct Investment data (MiDi) and corporate balance sheet data (Ustan and Hoppenstedt) for the tax base estimations. The data are used to construct (i) a separate accounting and (ii) a formula apportionment tax base for the firms in the sample. Our results suggest that due to border crossing loss offset, the EU-wide corporate tax base represented by our data sample shrinks significantly. Smaller countries which are usually considered to attract book profits under the current system, i.e. Ireland and the Netherlands, tend to lose a larger part of their tax base than larger countries like Germany, Italy, France or Great Britain. However, these results should be evaluated in light of the limitations of the data used in this study since our analysis is based on German FDI data only. Furthermore, the calculations do not take into account behavioral responses of companies caused by such a system change.
|Centre:||Oxford University Centre for Business Taxation|
|Date Deposited:||29 May 2012 14:12|
|Last Modified:||23 Oct 2015 14:07|
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