Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/114171
Authors: 
Bräutigam, Rainer
Spengel, Christoph
Streif, Frank
Year of Publication: 
2015
Series/Report no.: 
ZEW Discussion Papers 15-055
Abstract: 
The European Court of Justice (ECJ) has become an influential player in the field of direct taxation in the European Union in the past twenty years. However, it is unclear whether the ECJ's decisions actually increase tax neutrality and therefore contribute to the achievement of an internal market as stipulated by the European treaties or not. In 2006, the ECJ limited the applicability of specific tax rules in Europe that are intended to prohibit the excessive use of low-tax countries. Our counterfactual scenarios show that this restriction of so-called controlled foreign company (CFC) rules and the related emergence of IP boxes cast doubt on the positive effects the ECJ is assumed to have. Additionally, we show that the abolishment of IP boxes would strengthen tax neutrality in Europe. Overall, further research is needed to relate and harmonise economic and legal concepts of tax neutrality.
Subjects: 
European Court of Justice
Tax Neutrality
Effective Tax Rates
Controlled Foreign Company Rules
Intellectual Property Boxes
JEL: 
H21
K10
Document Type: 
Working Paper

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