August 29, 2006

Who benefits from tax competition in the European Union?

EU-lidstaten hebben weinig baat bij verlaging van winstbelasting

Press release
EU-lidstaten hebben weinig baat bij verlaging van winstbelasting. Europese lidstaten profiteren per saldo weinig van een budgetneutrale tariefsverlaging van de vennootschapsbelasting (Vpb).

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Albert van der Horst

Domestic distortions proof highly relevant as even unilateral reductions of the corporate income tax rate might reduce welfare if the labour tax rate has to be increased. Profit shifting induces countries to underbid each others tax rates, but this effect is sizable only if two countries are closely linked. The harmful external effects of CIT rate reductions are limited, which reduces the need for European coordination of CIT rates.


Joeri Gorter
Albert van der Horst