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The Impact of Tax Avoidance in the European Union

Author

Listed:
  • Laurentiu-Mihai Tanase

    (The Bucharest University of Economic Studies, Romania)

  • Maxim Cetulean

    (The Bucharest University of Economic Studies, Romania)

  • Norina Popovici

    (“Ovidius” University of Constanta, Romania)

Abstract

In the context of contemporary debates on fiscal and economic policy, the impact of tax avoidance in the European Union was a frequently discussed topic at the negotiating table. In this paper, we followed the inflows of foreign direct investments and corporate tax collected to the state budget, trying to find out if a state with a high tax rate from the European Union could have an amortized impact of profit shifting, due to foreign direct investment inflows, also tracking how the corporate tax collected at the state budget changes, as the respective state reduces taxes. Following the research, we found out that paradoxically, as the state decreased the tax rate, corporate tax collected increased and also in certain years, the level of foreign direct investment exceeded corporate tax collected, which would indicate an amortized impact of tax avoidance.

Suggested Citation

  • Laurentiu-Mihai Tanase & Maxim Cetulean & Norina Popovici, 2023. "The Impact of Tax Avoidance in the European Union," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 170-174, December.
    • Handle: RePEc:ovi:oviste:v:xxiii:y:2023:i:2:p:170-174
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    References listed on IDEAS

    as
    1. Alfons Weichenrieder, 2009. "Profit shifting in the EU: evidence from Germany," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(3), pages 281-297, June.
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    More about this item

    Keywords

    tax avoidance; European Union; foreign direct investment; corporate tax;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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