@phdthesis{6918386,
  abstract     = {{The current rules for corporate taxation in Europe do not longer fit the globalized economic activities. Taxing corporate income on a national level leads to many tax obstacles for European multinationals. European multinationals, for example, face high compliance costs, suffer limitations to cross-border loss compensation and have to deal with transfer pricing issues. 
In an attempt to provide a comprehensive solution for the underlying tax obstacles that currently harm the international competitiveness of European multinationals, the European Commission (EC) launched a proposal for a Common Consolidated Corporate Tax Base directive (EC, 2011). The proposal includes one set of tax rules, allowing multinationals to calculate a common consolidated corporate tax base on a group level. The consolidated tax base would then be reapportioned to the different group members by means of an apportionment formula, which includes the factors active, sales and labour. The Member States preserve the right to apply their own tax rate to their specific share of the consolidated tax base. 
This dissertation contributes to the rather limited academic research concerning CCCTB. The core aims are (i) to explore the design of the European apportionment formula, (ii) to investigate the EU apportionment formula regarding the role of intangible assets in Belgium and (iii) to attain insights in the voting behaviour of the Members of the European Parliament (MEP).
In the first study we focus on the design of the European apportionment formula, which plays a major role in Member States’ concern for protecting their tax revenue, as well as for the multinational companies’ tax minimizing opportunities. More specifically, we investigate the effect of changing the number of factors that make up the formula and the weight given to each factor. We used unpublished firm level data from a listed multinational, which enabled us to study the factor definitions in detail. Our simulation results indicate that including more factors and applying more equal weights distributes the consolidated tax base more equally, which reduces tax planning opportunities. Moreover, for our multinational, using more simplified factors definitions does not change the allocation of the consolidated tax base to a great extent. This advocates the inclusion of simplified factor definitions to reduce the compliance costs for multinationals.
In the second study we focus on the factor assets in the apportionment formula. Namely, it is the commission’s intention to only partly and temporarily include intangible assets into this factor. The main reason for this is that the inclusion of intangibles could create tax planning opportunities for multinationals caused by location and valuation issues. However, excluding intangible assets from the apportionment formula could lead to an unfair distribution of the consolidated tax base. Member States that invest highly in a more knowledge-based economy, would lose taxable income they are entitled to. We empirically investigate this issue in a Belgian context. More precisely, using firm specific data from the Belfirst database, we investigate the profit generating capacity of both the proposed allocation factors, i.e. tangible fixed assets, sales and labour, as well as the additional allocation factor, viz intangible assets. Our results show that intangible assets, defined as the sum of ‘capitalized R&D costs’ and ‘concessions, patents and licences’, have a significant and positive impact on the creation of profit. We also include the factor capitalized R&D costs separately and find a positive and significant contribution of this factor to the generation of profit. In addition, our results show both the formula adding intangible assets to the proposed allocations factors, and the formula adding capitalized R&D costs, perform significantly better than the formula only including the proposed factors. Moreover, the formula adding intangible assets is more precise in explaining profit than the formula including capitalized R&D costs.
The proposal for a CCCTB directive concerns a decision about direct taxation, meaning that the consultation procedure is applied. This procedure implies that the final decision rests with the Council of the EU and that the European Parliament plays a consultative role. In April 2012, the Member of the European Parliament approved the amended CCCTB proposal (452 votes in favour, 172 against and 36 abstentions). The third study gives insight into the voting behaviour of MEPs concerning the CCCTB directive. We focus on the question whether or not the voting behaviour of MEPs is influenced by the economic impact of CCCTB for their country. The economic impact of CCCTB is measured through the impact of CCCTB for each MS on their corporate income tax revenue. We collected the voting results from the independent organization VoteWatch Europe. Our results show that a higher impact of CCCTB on the corporate income tax revenue, increases the likelihood of a MEP to vote in favour of the proposal. As a robustness check we also measured economic impact by using the impact on employment and GDP. Again, we find that MEPs are significantly and positively influenced in their voting behaviour by the impact of CCCTB on employment and GDP for their country. Finally, we find that political party and country variables also have a significant effect on the voting behaviour of MEPs, whereas the individual characteristics of MEP did not have a significant influence.}},
  author       = {{Verleyen, Isabelle}},
  keywords     = {{CCCTB,EU apportionment formula,voting behaviour}},
  language     = {{eng}},
  pages        = {{XX, 119}},
  publisher    = {{Ghent University. Faculty of Economics and Business Administration}},
  school       = {{Ghent University}},
  title        = {{Essays on the harmonization of the corporate tax system in Europe}},
  year         = {{2015}},
}