Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/30860
Authors: 
Dahle, Claudia
Bäumer, Michaela
Year of Publication: 
2009
Series/Report no.: 
Arqus-Diskussionsbeiträge zur quantitativen Steuerlehre 66
Abstract: 
The European Commission proposed to replace the currently existing Separate Accounting by an EU-wide tax system based on a Common Consolidated Corporate Tax Base (CCCTB). Besides the CCCTB, there is an alternative tax reform proposal, the European Tax Allocation System (ETAS). In a dynamic capital budgeting model we analyze the impacts of selected loss-offset limitations currently existing in the EU under both concepts on corporate crossborder real investments of MNE. The analyses show that replacing Separate Accounting by either concept can lead to increasing profitability due to cross-border loss compensation. However, if the profitability increases, the study indicates that the main criteria of decisions on location are the tax rate divergences within the EU Member States. High tax rate differentials in the Member States imply significant redistribution of tax payments under CCCTB and ETAS. The results clarify that in both reform proposals tax payment reallocations occur in favor of the holding. National loss-offset limitations and minimum taxation concepts in tendency lose their impact on the profitability under both proposals. However, we found scenarios in which national minimum taxation can encroach upon the group level, although in our model the minimum taxation's impacts seem to be slight. Moreover, we identify harmful paradoxes in ETAS due to the tax credit mechanism. Our results can contribute to the current discussion on corporate group tax harmonization within the EU and other economic zones, e.g. the US, and help to anticipate the tax effects of lossoffset restrictions under the respective tax systems.
Subjects: 
Common Consolidated Corporate Tax Base
corporate taxation
European Tax Allocation System
Formula Apportionment
group taxation
investment
loss carry-forward
loss-offset
minimum taxation
Document Type: 
Working Paper

Files in This Item:
File
Size
443.02 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.