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Do Large Companies Have Lower Effective Corporate Tax Rates? A European Survey

Author

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  • Gaëtan Nicodème

Abstract

The current debate in corporate taxation is focusing on leveling the tax playing field within the European Union for companies operating across-countries. However, tax burdens could also vary with the size of companies within the same country, raising the question whether large companies pay their share of the burden. This paper uses firm-level data for 21 European countries between 1992 and 2004. The paper finds a robust negative correlation between the number of employees and the effective tax burden of companies. This result tends to validate theories arguing that large companies may enjoy a lower tax burden. As a caveat, using total assets as size variable produces a positive relationship. This relationship is however less robust and less economically significant.

Suggested Citation

  • Gaëtan Nicodème, 2007. "Do Large Companies Have Lower Effective Corporate Tax Rates? A European Survey," Working Papers CEB 07-001.RS, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:sol:wpaper:07-001
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    Citations

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    Cited by:

    1. Gaëtan Nicodème, 2008. "Corporate Income Tax and Economic Distortions," Working Papers CEB 08-033.RS, ULB -- Universite Libre de Bruxelles.
    2. Jan Svitlík, 2015. "ETR Development and Analysis: Case from the Czech Republic," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2015(4), pages 5-18.
    3. Marija BrajÄ ić & Dubravka KuÅ¡Ä ević, 2017. "Child and the Work of Art," European Journal of Social Sciences Education and Research Articles, Revistia Research and Publishing, vol. 4, ejser_v4_.
    4. European Commission, 2012. "Tax reforms in EU Member States - Tax policy challenges for economic growth and fiscal sustainability – 2012 Report," Taxation Papers 34, Directorate General Taxation and Customs Union, European Commission.
    5. Zhou, Zhongsheng & Li, Zhuo, 2023. "Corporate digital transformation and trade credit financing," Journal of Business Research, Elsevier, vol. 160(C).
    6. Weixian Cai & John Whalley, 2014. "Effective VAT Rates and Administrative Discretion in China," CESifo Working Paper Series 4746, CESifo.
    7. Marcin Piatkowski & Mariusz Jarmuzek, 2008. "Zero Corporate Income Tax in Moldova: Tax Competition and Its Implications for Eastern Europe," IMF Working Papers 2008/203, International Monetary Fund.
    8. Belz, Thomas & von Hagen, Dominik & Steffens, Christian, 2019. "Taxes and firm size: Political cost or political power?," Journal of Accounting Literature, Elsevier, vol. 42(C), pages 1-28.

    More about this item

    Keywords

    Corporate taxation; Effective tax rates; political power; political cost.;
    All these keywords.

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence

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