The taxation of companies operating in more than one Member State in the European Union is undergoing a transformation. The scope of prevalent group taxation regimes in the Member States is currently still largely limited to resident entities. The need for reform could already arise in the short-term if the European Court of Justice should in the pending Marks&Spencer case eventually conclude that the exclusion of non-resident firms from the British group relief may not be in accordance with the fundamental freedoms of the EC law. Moreover, in the long term the European Commission seeks to provide companies with a common consolidated corporate income tax base for their EU-wide activities. Three distinct steps are necessary to arrive at the tax base for each jurisdiction: (1) each group member calculates its taxable profits separately but according to the same set of rules; (2) the group aggregates these individual tax bases to the consolidated tax base; (3) the consolidated tax base is allocated to the different Member States by applying specific factors (e.g. formulary apportionment). Finally, each Member State has the right to tax the allocated portion of the consolidated tax base at its domestic tax rates. Against this background, the research project aims at formulating alternative concepts for further development of the Organschaft in Germany as well as of the common consolidated tax base anticipated in the European Union. Accordingly, the research project comprises two parts. The first part elaborates on the alternatives for further development of group taxation from the national perspective. This is anchored in a comprehensive comparative analysis of existing national legislation regarding the taxation of domestic and multinational groups of companies in the Member States of the European Union. The second part addresses the harmonisation drive of the European Commission with respect to the establishment of a common consolidated corporate tax base. Based on harmonised rules for the determination of taxable income, at first alternative concepts regarding the definition of the tax group and the computation of the consolidated tax base are developed. Moreover, various forms of indirect allocation of the consolidated tax base among the respective member states will be indicated and analysed. In this context questions pertaining to aspects of the German Gewerbesteuer will be dealt with as well.

Project duration

01.10.2005 - 15.10.2006

Cooperation partner

Universität Göttingen, Göttingen, DE
Universität Hamburg, Hamburg, DE
Universität Erlangen-Nürnberg, DE