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Formula Apportionment in the European Union: A Dream Come True or the EU’s Worst Nightmare?

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  • Joann Weiner

Abstract

The European Commission recently endorsed a future company tax policy that would allow companies to consolidate their tax bases and apportion the income across the EU using an allocation mechanism. This policy would replace the separate accounting method with formula apportionment of EU group profits as the main method of taxing multinational companies in the European Union. However, many details of the approaches remain to be presented, and these details may turn what appears to be a simple solution into an extremely complex one. This paper explores some technical details that arise in adopting formula apportionment in the European Union.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2002/wp-cesifo-2002-02/cesifo_wp667.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 667.

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Date of creation: 2002
Date of revision:
Handle: RePEc:ces:ceswps:_667

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References

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  1. Nielsen, Soren Bo & Raimondos-Møller, Pascalis & Schjelderup, Guttorm, 2001. "Tax Spillovers under Separate accounting and Formula Apportionment," CEPR Discussion Papers 2831, C.E.P.R. Discussion Papers.
  2. Jack Mintz & Michael Smart, 2001. "Income Shifting, Investment, and Tax Competition: Theory and Evidence from Provincial Taxation in Canada," CESifo Working Paper Series 554, CESifo Group Munich.
  3. Mintz, Jack & Weiner, Joann Martens, 2003. "Exploring Formula Allocation for the European Union," International Tax and Public Finance, Springer, vol. 10(6), pages 695-711, November.
  4. Joeri Gorter & Ruud de Mooij, 2001. "Capital income taxation in Europe; trends and trade-offs," CPB Special Publication 30, CPB Netherlands Bureau for Economic Policy Analysis.
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Cited by:
  1. Albert van der Horst & Leon Bettendorf & Hugo Rojas-Romagosa, 2007. "Will Corporate Tax Consolidation improve Efficiency in the EU ?," Tinbergen Institute Discussion Papers 07-076/2, Tinbergen Institute.
  2. Peter Birch Sørensen, 2003. "Company Tax Reform in the European Union," EPRU Working Paper Series 03-08, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  3. Marcel Gérard & Joann Weiner, 2003. "Cross-Border Loss Offset and Formulary Apportionment: How do they affect multijurisdictional firm investment spending and interjurisdictional tax competition ?," CESifo Working Paper Series 1004, CESifo Group Munich.
  4. Michael P. Devereux & Simon Loretz, 2008. "The Effects of EU Formula Apportionment on Corporate Tax Revenues," Fiscal Studies, Institute for Fiscal Studies, vol. 29(1), pages 1-33, 03.
  5. Gaëtan Nicodème, 2006. "Corporate tax competition and coordination in the European Union: What do we know? Where do we stand?," European Economy - Economic Papers 250, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  6. Rüdiger Pethig & Andreas Wagener, 2007. "Profit tax competition and formula apportionment," International Tax and Public Finance, Springer, vol. 14(6), pages 631-655, December.
  7. Marcel Gérard, 2006. "Reforming the Taxation of Multijurisdictional Enterprises in Europe, “Coopetition” in a Bottom-up Federation," CESifo Working Paper Series 1860, CESifo Group Munich.
  8. Jan Thomas Martini & Rainer Niemann & Dirk Simons, 2007. "Transfer Pricing or Formula Apportionment? Tax-Induced Distortions of Multinationals’ Investment and Production Decisions," CESifo Working Paper Series 2020, CESifo Group Munich.
  9. Clemens Fuest & Bernd Huber, 2003. "Zur Koordinierung der Unternehmensbesteuerung in Europa," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(3), pages 378-390.
  10. Peter Sørensen, 2004. "Company Tax Reform in the European Union," International Tax and Public Finance, Springer, vol. 11(1), pages 91-115, January.
  11. Marcel Gérard, 2005. "Multijurisdictional Firms and Governments’ Strategies under Alternative Tax Designs," CESifo Working Paper Series 1527, CESifo Group Munich.

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