The Strategy of Shifting-to-Losses: The Case of Common Consolidated Corporate Tax Base (CCCTB) in the European Union
The Strategy of Shifting-to-Losses: The Case of Common Consolidated Corporate Tax Base (CCCTB) in the European Union
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 shows also 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 practical 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, European Union, tax planning
UCPH Fiscal Relations Law Journal (FIRE Journal) aims to be the ideal publication platform for innovative and entrepreneurial lawyers, scholars, and students writing on a broad array of topics relating to tax law and fiscal matters. The FIRE Journal has been established in close collaboration between the FIRE – Fiscal Relations Research Group and the Research Group on Law Teaching and Learning, both at the Faculty of Law, University of Copenhagen (UCPH), DJOEF Publishing, the Danish Foundation for Entrepreneurship.
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