The cross-border company taxation in the member states of the European Union and the OECD distorts investment and financing decisions and hence the allocation of capital. This results from differing tax levels and the simultaneous application of the source and the residence principle. The member states of the EU and the OECD increasingly fight tax planning strategies (for example intra-group financing or transfer pricing) by implementing and tightening anti-avoidance provisions. Though, such provisions are in many cases not effective, tend to cause double taxation, give rise to new distortions and moreover involve high compliance costs.Hence, the project aims at identifying and analysing the cross-border taxation of business profits, dividends, interest and royalties at the company level in the member states of the EU as well as some OECD countries taking into account anti-avoidance provisions, i.e. thin capitalisation rules, controlled-foreign-company legislation and the taxation of the transfer of intangible assets. The analysis focuses on highlighting distortions by drawing on effective tax rates determined based on the approach of Devereux & Griffith. In addition, further aspects are discussed including the conformity with European Law and tax treaties, feasibility issues as well as implications that can be drawn from the concept of inter-nation equity.

Project duration

01.03.2011 - 30.11.2012

Contact
Project members

Prof. Dr. Christoph Spengel (Coordinator)
Dr. Lisa Evers

Departments

Corporate Taxation and Public Finance