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Corporate tax consolidation and enhanced coorporation in the European Union

  • Leon Bettendorf

    ()

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Albert van der Horst

    ()

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Ruud A. de Mooij

    ()

    (Erasmus University Rotterdam, CPB, Tinbergen Institute, Oxford University Centre for Business Taxation, CESifo)

  • Hendrik Vrijburg

    ()

    (Erasmus University Rotterdam)

This article assesses the economic implications of the introduction of consolidation with formula apportionment in the European Union under alternative enhanced cooperation agreements. We fi?nd that the consolidation is likely to yield a small aggregate welfare gain in Europe, but that not all countries benefi?t. A coalition of winning countries reduces the welfare gain and may induce a process of adverse selection which distroys the possibility of cooperation. We fi?nd that a coalition of similar countries (in terms of the size of their multinational sector) is more feasible in achieving agreement and is actually preferred by those countries over a European-wide reform.

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Paper provided by Oxford University Centre for Business Taxation in its series Working Papers with number 1001.

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Date of creation: 2010
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Handle: RePEc:btx:wpaper:1001
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  1. Paola Conconi & Paola Riezman & Carlo Perroni, 2008. "Is Partial Tax Harmonization Desirable?," ULB Institutional Repository 2013/98550, ULB -- Universite Libre de Bruxelles.
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  11. Riedel, Nadine & Runkel, Marco, 2007. "Company tax reform with a water's edge," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1533-1554, August.
  12. Klassen, Kenneth J. & Shackelford, Douglas A., 1998. "State and provincial corporate tax planning: income shifting and sales apportionment factor management," Journal of Accounting and Economics, Elsevier, vol. 25(3), pages 385-406, June.
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  15. Leon Bettendorf & Joeri Gorter & Albert van der Horst, 2006. "Who benefits from tax competition in the European Union?," CPB Document 125, CPB Netherlands Bureau for Economic Policy Analysis.
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  20. repec:dgr:uvatin:20070076 is not listed on IDEAS
  21. Albert van der Horst & Leon Bettendorf & Hugo Rojas-Romagosa, 2007. "Will corporate tax consolidation improve efficiency in the EU?," CPB Document 141, CPB Netherlands Bureau for Economic Policy Analysis.
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