Corporate Income Tax Harmonization in the European Union PDF
Preview Corporate Income Tax Harmonization in the European Union
PalgraveMacmillanStudiesinBankingandFinancialInstitutions SeriesEditor:ProfessorPhilipMolyneux ThePalgraveMacmillanStudiesinBankingandFinancialInstitutionsareinternationalin orientationandincludestudiesofbankingwithinparticularcountriesorregions,andstudies ofparticularthemessuchasCorporateBanking,RiskManagement,MergersandAcquisi- tions,etc.Thebooks’focusisonresearchandpractice,andtheyincludeup-to-dateand innovative studies on contemporary topics in banking that will have global impact and influence. Titlesinclude: SteffenE.Andersen THEEVOLUTIONOFNORDICFINANCE SethApati THENIGERIANBANKINGSECTORREFORMS PowerandPolitics RobertoBottiglia,ElisabettaGualandriandGianNereoMazzocco(editors) CONSOLIDATIONINTHEEUROPEANFINANCIALINDUSTRY DimitrisN.Chorafas BASELIII,THEDEVILANDGLOBALBANKING DimitrisN.Chorafas CAPITALISMWITHOUTCAPITAL DimitrisN.Chorafas SOVEREIGNDEBTCRISIS TheNewNormalandtheNewlyPoor ViolaineCousin BANKINGINCHINA VincenzoD’ApiceandGiovanniFerri FINANCIALINSTABILITY ToolkitforInterpretingBoomandBustCycles PeterFalushandRobertL.CarterOBE THEBRITISHINSURANCEINDUSTRYSINCE1900 TheEraofTransformation FrancoFiordelisiandOrnellaRicci(editors) BANCASSURANCEINEUROPE Past,PresentandFuture FrancoFiordelisi,PhilipMolyneuxandDanielePreviati(editors) NEWISSUESINFINANCIALANDCREDITMARKETS FrancoFiordelisi,PhilipMolyneuxandDanielePreviati(editors) NEWISSUESINFINANCIALINSTITUTIONSMANAGEMENT KimHawtrey AFFORDABLEHOUSINGFINANCE JillM.Hendrickson REGULATIONANDINSTABILITYINU.S.COMMERCIALBANKING AHistoryofCrises Alexandros-AndreasKyrtsis(editor) FINANCIALMARKETSANDORGANIZATIONALTECHNOLOGIES SystemArchitectures,PracticesandRisksintheEraofDeregulation PaolaLeoneandGianfrancoA.Vento(editors) CREDITGUARANTEEINSTITUTIONSANDSMEFINANCE CaterinaLucarelliandGianniBrighetti(editors) RISKTOLERANCEINFINANCIALDECISIONMAKING RomanMatousek(editor) MONEY,BANKINGANDFINANCIALMARKETSINCENTRALANDEASTERNEUROPE 20YearsofTransition PhilipMolyneux(editor) BANKPERFORMANCE,RISKANDFIRMFINANCING PhilipMolyneux(editor) BANKSTRATEGY,GOVERNANCEANDRATINGS ImadA.Moosa THEMYTHOFTOOBIGTOFAIL SimonMouattandCarlAdams(editors) CORPORATEANDSOCIALTRANSFORMATIONOFMONEYANDBANKING BreakingtheSerfdom VictorMurinde(editor) BANKREGULATORYREFORMSINAFRICA AndersÖgren(editor) THESWEDISHFINANCIALREVOLUTION ÖzlemOlgu EUROPEANBANKING Enlargement,StructuralChangesandRecentDevelopments DanielaPîrvu CORPORATEINCOMETAXHARMONIZATIONINTHEEUROPEANUNION RamkishenS.Rajan EMERGINGASIA EssaysonCrises,CapitalFlows,FDIandExchangeRate AllesandroRoselli FINANCIAL STRUCTURES AND REGULATION: A COMPARISON OF CRISES IN THE UK, USAANDITALY YasushiSuzuki JAPAN’SFINANCIALSLUMP CollapseoftheMonitoringSystemunderInstitutionalandTransitionFailures RuthWandhöfer EUPAYMENTSINTEGRATION TheTaleofSEPA,PSDandOtherMilestonesAlongtheRoad Thefulllistoftitlesavailableisonthewebsite: www.palgrave.com/finance/sbfi.asp PalgraveMacmillanStudiesinBankingandFinancialInstitutions SeriesStandingOrderISBN978–1–403–94872–4 (outsideNorthAmericaonly) Youcanreceivefuturetitlesinthisseriesastheyarepublishedbyplacingastandingorder. Pleasecontactyourbookselleror,incaseofdifficulty,writetousattheaddressbelowwith yournameandaddress,thetitleoftheseriesandtheISBNquotedabove. Customer Services Department, Macmillan Distribution Ltd, Houndmills, Basingstoke, HampshireRG216XS,England Corporate Income Tax Harmonization in the European Union Daniela Pîrvu DeanoftheFacultyofEconomics,UniversityofPitesti,Romania ©DanielaPîrvu2012 Softcover reprint of the hardcover 1st edition 2012 978-1-137-00090-3 Allrightsreserved.Noreproduction,copyortransmissionofthis publicationmaybemadewithoutwrittenpermission. Noportionofthispublicationmaybereproduced,copiedortransmitted savewithwrittenpermissionorinaccordancewiththeprovisionsofthe Copyright,DesignsandPatentsAct1988,orunderthetermsofanylicence permittinglimitedcopyingissuedbytheCopyrightLicensingAgency, SaffronHouse,6–10KirbyStreet,LondonEC1N8TS. Anypersonwhodoesanyunauthorizedactinrelationtothispublication maybeliabletocriminalprosecutionandcivilclaimsfordamages. Theauthorhasassertedherrighttobeidentifiedastheauthorofthiswork inaccordancewiththeCopyright,DesignsandPatentsAct1988. Firstpublished2012by PALGRAVEMACMILLAN PalgraveMacmillanintheUKisanimprintofMacmillanPublishersLimited, registeredinEngland,companynumber785998,ofHoundmills,Basingstoke, HampshireRG216XS. PalgraveMacmillanintheUSisadivisionofStMartin’sPressLLC, 175FifthAvenue,NewYork,NY10010. PalgraveMacmillanistheglobalacademicimprintoftheabovecompanies andhascompaniesandrepresentativesthroughouttheworld. Palgrave®andMacmillan®areregisteredtrademarksintheUnitedStates, theUnitedKingdom,Europeandothercountries. ISBN 978-1-349-43347-6 ISBN 978-1-137-00091-0 (eBook) DOI 10.1057/9781137000910 Thisbookisprintedonpapersuitableforrecyclingandmadefromfully managedandsustainedforestsources.Logging,pulpingandmanufacturing processesareexpectedtoconformtotheenvironmentalregulationsofthe countryoforigin. AcataloguerecordforthisbookisavailablefromtheBritishLibrary. AcatalogrecordforthisbookisavailablefromtheLibraryofCongress. 10 9 8 7 6 5 4 3 2 1 21 20 19 18 17 16 15 14 13 12 Contents ListofFigures ix ListofTables x Acknowledgements xi Introduction 1 1 TheTaxHarmonizationintheEuropeanUnion 8 1.1 Introduction 8 1.2 Conceptualdelimitations 8 1.3 Thelegalbasisoftaxharmonization 11 1.4 ReasonsfortaxharmonizationintheEU 14 1.4.1 StimulatingeffectivefunctioningoftheSingle Market 14 1.4.2 Preventingrevenueerosion 15 1.4.3 Avoidingharmfultaxcompetition 20 1.4.4 Preventingdistortionsregardingresource allocation 22 1.5 Conclusion 23 2 TheEvolutionofTaxHarmonizationinthe EuropeanUnion 25 2.1 Introduction 25 2.2 ThestatusofindirecttaxharmonizationintheEU 25 2.2.1 TheevolutionofthelegalsystemofVATin theEU 25 2.2.2 Europeanregulationsonexciseduty 30 2.3 Initiativesandachievementsinthefieldofdirect taxationintheEU 32 2.3.1 Initiativesinthefieldofdirecttax harmonizationwithintheEU:fromthe conclusionsoftheNeumarkreport(1962)tothe adoptionofthetaxpackagetoavoidharmful taxcompetitionintheSingleMarket(2003) 32 v vi Contents 2.3.2 TheEuropeanCommission’sstrategicobjectives for2001–2007 40 2.3.3 Themainlegalregulationsrelatingtodirect taxationwithintheEU 49 2.4 Perspectivesontheevolutionoftaxharmonization intheEU 59 2.5 Conclusion 61 3 TheNeedforEuropeanUnionCoordinationof CorporateIncomeTaxes:FactsandStatistics 63 3.1 Introduction 63 3.2 CorporateincometaxintheEUandtaxcompetition 63 3.2.1 Thetrendtoreducecorporateincometaxrates 63 3.2.2 Differencesindeterminingthetaxableincome ofcompaniesinEUcountries 68 3.3 Corporatetaxarbitrageopportunities 71 3.3.1 Transferpricingmechanism 71 3.3.2 Intra-grouploans 79 3.4 Conclusion 83 4 ObjectivesofCorporateIncomeTaxCoordinationinthe EuropeanUnion 84 4.1 Introduction 84 4.2 Thepreventionofdistortionofcompetitionwithinthe SingleMarketbyfiscalpolicythatstimulatescorporate locationdecisions 84 4.3 Diminishingcorporatetaxarbitrageopportunities 89 4.4 Thereductionofadministrativeandcompliancecosts associatedwithcorporateincometaxation 91 4.5 Conclusion 93 5 CoordinationSystemsofCorporateIncomeTaxinthe EuropeanUnion 94 5.1 Introduction 94 5.2 EuropeanCorporateIncomeTax 94 5.3 HomeStateTaxation 96 5.4 TheCommonConsolidatedCorporateTaxBase 102 5.4.1 Objectivesofthe“CommonConsolidated CorporateTaxBase” 102 5.4.2 Eligibleorganizationsforthe“Common ConsolidatedCorporateTaxBase” 104 Contents vii 5.4.3 Generalprinciplesofthe“Common ConsolidatedCorporateTaxBase” 109 5.4.4 Definingandassessingthetaxbase 111 5.4.5 Opportunitiesforconsolidationandformulafor allocatingtheconsolidatedtaxbase 118 5.4.6 Administrativeframework 132 5.5 Conclusion 136 6 EffectsofCorporateIncomeTax Harmonization/CoordinationintheEuropeanUnion 138 6.1 Introduction 138 6.2 ResultsofstudiesrequestedbytheDirectorate-General forTaxationandCustomsUnion 138 6.3 Evaluationofcorporateincometaxharmonization effectsbyindependentresearchers 143 6.4 Economiceffectsofenhancedcooperationbetweena groupofmemberstates 145 6.5 Conclusion 149 7 ImpactAssessmentoftheCommonConsolidated CorporateTaxBase 150 7.1 Introduction 150 7.2 Effectsofcorporatetaxbaseconsolidationand distribution 150 7.3 ImpactassessmentspublishedbytheEuropean Commission 154 7.4 Theimpactofdistributionfactorsonrevenuefrom corporateincometaxineconomicallylessdeveloped memberstates 161 7.5 Conclusion 164 8 SupportersandOpponentsofCorporateIncomeTax CoordinationintheEuropeanUnion 165 8.1 Introduction 165 8.2 Politicalreactionsregardingthetrendtowards corporateincometaxharmonization 165 8.3 OpinionsfromtheEuropeanbusinessenvironment regardingthetrendtowardscorporateincometax harmonization 169 8.4 PoliticalviewsontheCCCTBdraftdirective 171 8.4.1 ReasonedopinionbytheHouseof RepresentativesoftheKingdomofthe viii Contents NetherlandsontheproposalforaEuropean CouncildirectiveonaCCCTB 171 8.4.2 ReasonedopinionbytheHouseofCommonsof theUnitedKingdomofGreatBritainand NorthernIrelandontheproposalfora EuropeanCouncildirectiveonaCCCTB 172 8.4.3 ReasonedopinionbyDáilÉireannofthe RepublicofIrelandontheproposalfora EuropeanCouncildirectiveonaCCCTB 173 8.4.4 ReasonedopinionbytheHouseof RepresentativesoftheRepublicofMaltaonthe proposalforaEuropeanCouncildirectiveona CCCTB 174 8.4.5 ReasonedopinionbytheRiksdagofthe KingdomofSwedenontheproposalfora EuropeanCouncildirectiveonaCCCTB 176 8.4.6 ReasonedopinionbytheSejmoftheRepublic ofPolandontheproposalforaEuropean CouncildirectiveonaCCCTB 177 8.4.7 ReasonedopinionbytheNationalCouncilof theSlovakRepublicontheproposalfora EuropeanCouncildirectiveonaCCCTB 178 8.4.8 ReasonedopinionbytheChamberofDeputies ofRomaniaontheproposalforaEuropean CouncildirectiveonaCCCTB 179 8.4.9 ReasonedopinionbytheNationalAssemblyof theRepublicofBulgariaontheproposalfora EuropeanCouncildirectiveonaCCCTB 180 8.5 Conclusion 183 Conclusions 185 Appendices 193 Notes 222 References 227 Index 235 Figures 3.1 Developmentofadjustedstatutorytaxrateoncorporate income 64 3.2 Developmentoftheaveragecorporateincometax receiptsintheEU(asapercentageofGDP) 65 3.3 Developmentoftheaveragecorporateincometax receiptsintheEU(asapercentageoftotaltaxation) 66 3.4 Implicitandstatutorytaxratesoncorporateincomein somememberstates(2009) 67 3.5 DevelopmentoftheaverageimplicittaxrateintheEU 67 3.6 Internationaltransferoffundsthroughintra-grouploans 80 4.1 Statutorycorporateincometaxratesandeffectiveaverage taxratesinmemberstates(2009) 88 5.1 BasicfunctioningoftheHSTpilotscheme 100 5.2 ExampleAofeligiblestructurefortaxconsolidationin theEU 106 5.3 ExampleBofeligiblestructurefortaxconsolidationin theEU 106 5.4 ExampleCofeligiblestructurefortaxconsolidationin theEU 107 5.5 ExampleDofeligiblestructurefortaxconsolidationin theEU 107 5.6 ExampleEofeligiblestructurefortaxconsolidationin theEU 107 5.7 ExampleFofeligiblestructurefortaxconsolidationin theEU 108 7.1 GDPpercapitainpurchasingpowerstandardsin2009 (EU-27=100) 162 7.2 Annualearningsin2006(EU-27=¤27,768) 163 ix
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