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Corporate tax consolidation and enhanced cooperation in the European Union

  • Leon Bettendorf

    ()

  • Albert van der Horst

    ()

  • Ruud de Mooij
  • Hendrik Vrijburg

    ()

This article assesses the economic implications of the introduction of consolidation with formula apportionment in the European Union under alternative enhanced cooperation agreements. We find that the consolidation is likely to yield a small aggregate welfare gain in Europe, but that not all countries benefit. A coalition of winning countries reduces the welfare gain and may induce a process of adverse selection that reduces the number of participating countries. We find 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 CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 132.

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Date of creation: Nov 2009
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Handle: RePEc:cpb:discus:132
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  18. Bordignon, Massimo & Brusco, Sandro, 2006. "On enhanced cooperation," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 2063-2090, November.
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