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New Forms of Tax Competition in the European Union: An Empirical Investigation

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  • Eloi Flamant
  • Sarah Godar
  • Gaspard Richard

Abstract

This report provides an empirical analysis of tax competition between individuals and firms in the European Union. We find that tax competition increasingly takes the form of preferential or narrowly targeted tax regimes in addition to general rate reductions. We provide a ranking of the most harmful regimes targeting foreigners, primarily high-income or high-wealth individuals. We also discuss several options for dealing with these trends.

Suggested Citation

  • Eloi Flamant & Sarah Godar & Gaspard Richard, 2021. "New Forms of Tax Competition in the European Union: An Empirical Investigation," Reports 003, EU Tax Observatory.
    • Handle: RePEc:dbp:report:003
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    File URL: https://www.taxobservatory.eu//www-site/uploads/2021/11/EU-Tax-Observatory-Report-3-Tax-Competition-November-2021-3.pdf
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    References listed on IDEAS

    as
    1. Zodrow, George R, 2003. "Tax Competition and Tax Coordination in the European Union," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(6), pages 651-671, November.
    2. Ufuk Akcigit & Salomé Baslandze & Stefanie Stantcheva, 2016. "Taxation and the International Mobility of Inventors," American Economic Review, American Economic Association, vol. 106(10), pages 2930-2981, October.
    3. European Commission, 2020. "Taxation trends in the European Union: 2020 edition," Taxation trends 2020, Directorate General Taxation and Customs Union, European Commission.
    4. Katarzyna Anna Bilicka, 2019. "Comparing UK Tax Returns of Foreign Multinationals to Matched Domestic Firms," American Economic Review, American Economic Association, vol. 109(8), pages 2921-2953, August.
    5. Javier Garcia-Bernardo & Petr Janský & Thomas Tørsløv, 2022. "Decomposing Multinational Corporations’ Declining Effective Tax Rates," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 70(2), pages 338-381, June.
    6. European Commission, 2018. "Taxation trends in the European Union: 2018 edition," Taxation trends 2018, Directorate General Taxation and Customs Union, European Commission.
    7. Spengel, Christoph & Schmidt, Frank & Heckemeyer, Jost H. & Nicolay, Katharina & Bartholmeß, Alexandra & Ludwig, Christopher & Steinbrenner, Daniela & Buchmann, Peter & Bührle, Anna Theresa & Dutt, Ve, 2020. "Effective tax levels using the Devereux/Griffith methodology," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 231440.
    8. Wilson, John Douglas & Wildasin, David E., 2004. "Capital tax competition: bane or boon," Journal of Public Economics, Elsevier, vol. 88(6), pages 1065-1091, June.
    9. European Commission, 2021. "Taxation trends in the European Union: 2021 edition," Taxation trends 2020, Directorate General Taxation and Customs Union, European Commission.
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    Citations

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    Cited by:

    1. Bührle, Anna Theresa & Nicolay, Katharina & Spengel, Christoph & Wickel, Sophia, 2023. "From corporate tax competition to global cooperation? Trends, prospects and effects on German family businesses," ZEW Discussion Papers 23-027, ZEW - Leibniz Centre for European Economic Research.
    2. Lisa Marie Timm & Massimo Giuliodori & Paul Muller, 2022. "Tax incentives for high skilled migrants: evidence from a preferential tax scheme in the Netherlands," Tinbergen Institute Discussion Papers 22-068/V, Tinbergen Institute.
    3. Advani, Arun & Burgherr, David & Summers, Andy, "undated". "Taxation and Migration by the Super-Rich," CAGE Online Working Paper Series 630, Competitive Advantage in the Global Economy (CAGE).
    4. Lisa Marie Timm & Massimo Giuliodori & Paul Muller, 2025. "Tax Incentives for Migrants with Mid-level Earnings: Evidence from the Netherlands," American Economic Journal: Applied Economics, American Economic Association, vol. 17(3), pages 42-79, July.
    5. Fernando Rodrigo Sauco, 2025. "Millionaires on the Run? Taxation of the Rich and Induced Mobility: A Literature Review," Hacienda Pública Española / Review of Public Economics, IEF, vol. 253(2), pages 91-127, June.
    6. Jules Ducept & Sarah Godar, 2025. "Declining Effective Tax Rates of Multinationals: The Hidden Role of Tax Base Reforms," Working Papers 030, EU Tax Observatory.
    7. MIHÄ‚ILÄ‚, Nicoleta, 2021. "Globalization, Tax Policy And Tax Havens. Some Critical Considerations," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 25(4), pages 71-87, December.

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    More about this item

    Keywords

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    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls

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