How Would EU Corporate Tax Reform Affect Us Investment in Europe?

39 Pages Posted: 4 Nov 2011 Last revised: 12 Nov 2011

See all articles by Michael P. Devereux

Michael P. Devereux

Centre for Business Taxation, Oxford University; CESifo (Center for Economic Studies and Ifo Institute); Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR); University of Oxford - Said Business School; University of Oxford - Said Business School

Simon Loretz

University of Bayreuth; Oxford University Centre for Business Taxation; University of Innsbruck

Date Written: November 2011

Abstract

This paper examines the likely impact of a proposed formula apportionment system for corporation tax in the EU on the inbound investment of US multinational companies. We pay attention to tax planning strategies that may be employed by US multinationals and investigate whether effective tax rates in Europe of US companies differ from those of European companies. The proposal is for an optional system: we estimate the extent to which both European and US companies would be likely to choose it taking into account their existing structures and future investment incentives. The relative position of US and European companies depends crucially on the taxation of foreign passive income.

Suggested Citation

Devereux, Michael P. and Loretz, Simon, How Would EU Corporate Tax Reform Affect Us Investment in Europe? (November 2011). NBER Working Paper No. w17576. Available at SSRN: https://ssrn.com/abstract=1954502

Michael P. Devereux (Contact Author)

Centre for Business Taxation, Oxford University ( email )

Said Business School
Park End Street
Oxford, OX1 1HP
United Kingdom
+44 1865 288507 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

Simon Loretz

University of Bayreuth ( email )

Universit├Ątsstra├če 30
Bayreuth, 95447
Germany

Oxford University Centre for Business Taxation ( email )

Park End Street
Oxford, Oxfordshire OX1 1HP
United Kingdom

University of Innsbruck ( email )

Innsbruck, A-6020
Austria

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