The Strategy of Shifting-To-Losses: The Case of Common Consolidated Corporate Tax Base (CCCTB) in the European Union

UCPH Fiscal Relations Law Journal (FIRE Journal), Volume 2 - Issue 1, 2019

26 Pages Posted: 13 Mar 2019

See all articles by Shu-Chien Chen

Shu-Chien Chen

Erasmus University Rotterdam (EUR), Erasmus School of Law; University of Amsterdam, Faculty of Law, Students

Date Written: September 1, 2018

Abstract

Abstract: It has been long assumed that multinational taxpayers tend to shift profits to relatively low tax rate jurisdictions, for the purpose of reducing their global overall tax burden. Recently, research additionally shows the opposite: multinational taxpayers may shift profits to relatively high tax rate jurisdictions where there are loss-making affiliates. The proposed Common Consolidated Corporate Tax Base (CCCTB) system in the EU also provides the same opportunity of such »Shifting-To-Losses«strategy. This paper explains how the same scenarios can take place under the proposed CCCTB and suggests a practi- cal solution: to adopt an annual quantitative restriction to the losses that could be offset every tax year.

Keywords: Common Consolidated Corporate Tax Base (CCCTB), Losses, Base Erosion and Profit Shifting (BEPS), Un-harmonized Tax Rate, Europe- An Union, Tax Planning

Suggested Citation

Chen, Shu-Chien, The Strategy of Shifting-To-Losses: The Case of Common Consolidated Corporate Tax Base (CCCTB) in the European Union (September 1, 2018). UCPH Fiscal Relations Law Journal (FIRE Journal), Volume 2 - Issue 1, 2019, Available at SSRN: https://ssrn.com/abstract=3349008

Shu-Chien Chen (Contact Author)

Erasmus University Rotterdam (EUR), Erasmus School of Law ( email )

Netherlands

University of Amsterdam, Faculty of Law, Students ( email )

Amsterdam
Netherlands

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