Tax Harmonisation in Europe - The Determination of Corporate Taxable Income in the EU Member States

39 Pages Posted: 29 Jun 2007 Last revised: 26 Aug 2008

See all articles by Christoph Spengel

Christoph Spengel

Centre for European Economic Research (ZEW)

Andreas Oestreicher

University of Goettingen (Gottingen)

Date Written: 2007

Abstract

The aim of this paper is twofold. First, we want to examine whether and if so, to what extent, the concept of International Financial Reporting Standards (IFRS) meets the requirements of a Common Consolidated Corporate Tax Base (CCCTB) for the EU-wide activities of multinationals as proposed by the European Commission. Second, we estimate the consequences on the effective levels of company tax burdens in selected EU member states if IFRS are considered as a tool for defining the tax base. Our analysis reveals that IFRS could provide elements of a common and harmonised European tax base in certain areas. In particular, tax accounting still has to follow the realisation principle. Therefore, IFRS fair value-accounting cannot be adopted for tax purposes. A transition to tax accounting on the basis of IFRS has only minor effects on the effective tax burdens of companies.

Keywords: International Company Taxation, Effective Tax Burden, Tax Accounting, International Accounting Standards/ International Financial Reporting Standards, Common Consolidated tax base, European Union

JEL Classification: H21, H25

Suggested Citation

Spengel, Christoph and Oestreicher, Andreas, Tax Harmonisation in Europe - The Determination of Corporate Taxable Income in the EU Member States (2007). ZEW - Centre for European Economic Research Discussion Paper No. 07-035, Available at SSRN: https://ssrn.com/abstract=997208 or http://dx.doi.org/10.2139/ssrn.997208

Christoph Spengel (Contact Author)

Centre for European Economic Research (ZEW) ( email )

D-68161 Mannheim
Germany

Andreas Oestreicher

University of Goettingen (Gottingen) ( email )

Platz der Gottinger Sieben 3
Gottingen, D-37073
Germany

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