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Authors
Advisor(s)
Abstract(s)
In this paper we conduct an empirical analysis to assess the redistributional impact of implementing
a Formulary Apportionment approach in the European Union, compared to the current system based on
the separate entity approach, aiming to contribute with databased evidence to the ongoing sensitive
political debate about the much-needed change in the international (and, specifically, European) corporate
tax regime. We update and extend prior research to estimate which Member States will likely gain and
lose in terms of corporate tax base and revenues from the implementation of the ‘Business in Europe:
Framework for Income Taxation’ (BEFIT) initiative, planned to be soon launched by the European
Commission. Using recently published Country-by-Country Reporting data released by the Internal
Revenue Service, our findings show that the redistributional impact among Member States would be
significant. Results are in line with international tax literature: larger economies with higher tax rates
(such as Germany and France) would experience a considerable tax base increase, transferred from
smaller countries with lower tax rates (like the Netherlands and Ireland), as multinational enterprises
would have more restricted opportunities to engage in artificial profit shifting activities.
Description
Keywords
Country-by-Country Reporting European Union Formulary Apportionment profit shifting United States multinational enterprises
Pedagogical Context
Citation
Vicente, Joana Andrade (2023). "Rethinking corporate taxation in the European Union : how and where to tax multinational enterprises". REM Working paper series, nº 0286/2023
Publisher
ISEG - REM - Research in Economics and Mathematics