Tax incentives are a key component of governments' investment policy mix as they directly impact companies' tax burden. In this paper, we illustrate the EU's tax attractiveness as investment location over time in terms of effective average tax rates and evaluate potential tax reform options. Our...

The European Commission recently implemented the minimum tax directive (Pillar Two) to ensure that corporate profits are at least taxed at 15%. At the same time, it proposed a legislative initiative aimed at reducing the tax-induced distortions between debt and equity financing (debt-equity bias...

Forward looking measures like the well-known effective marginal tax rate developed by King and Fullerton (1984) are often criticized for not taking into account the complexity of the tax law. This paper derives a method of evaluating this kind of measure and of quantifying the bias resulting...

This paper develops a model of a monopolistically competitive industry with extensive and intensive business investment and shows how these margins respond to changes in average and marginal corporate tax rates. Intensive investment refers to the size of a firm's capital stock. Extensive...

In recent years, some European countries have relied on elements of an allow-ance for corporate equity (ACE) in the design of their tax systems. We analyse the effects of ACE-based taxation on rates of return and effective tax rates. In-vestment neutrality is lost if the imputed interest rate...

Upon more than 400 judgements on direct taxation, the case law of the European Court of Justice has considerably shaped Member States' tax systems. Based on Member States' tax law adjustments in the context of four landmark rulings on corporate income taxation, we analyse whether case law is a...

We develop a new methodology to decompose the observed decline in multinational corporations' (MNCs') effective tax rates into profit shifting to tax havens and several other components. We apply this methodology to the best available data for MNCs headquartered in the US - from the Bureau of...

Globalisation and the fast-approaching digitalisation increase capital as well as labour mobility fostering tax competition among countries worldwide. Based on a unique dataset, we analyse the development of effective tax burdens on corporations and highly skilled labour for 26 OECD countries...

This paper uses an Italian firm-level panel data-set over the period 1994 - 2006 to investigate the nexus between corporate taxation and investment. Studying the effects of corporate taxation on investment at the micro level has two advantages. Firstly, investment is free of aggregation biases...

We estimate the long-run effect of a uniform carbon tax on energy consumption by using a new and unique dataset in which effective tax rates of OECD countries are calculated in terms of carbon dioxide emissions. The effective tax rates account for the widely discussed tax deductions for specific...