How to Reform Taxation of Corporate Groups in Europe
- A. Oestreicher; C. Spengel; R. Koch
- World Tax Journal, 2011 (Volume 3), No 1
- 20 December 2010
There are at least two reasons why taxation of corporate groups in Europe calls for reform. Firstly, differences are to be found between the tax treatment of a corporate group and that of a single legal entity. Secondly, foreign subsidiaries are often subject to different tax treatment than their domestic counterparts. Against this background the paper discusses the provisions currently prevailing in the taxation of corporate groups in Europe, in view of tax neutrality criteria and the requirements arising from European law. Furthermore, a number of reform proposals are developed and evaluated. In this context it is considered whether, and if so how, shortcomings in prevailing corporate tax law (interperiod loss offset, deduction of participation-related expenses) could be overcome. Moreover, the introduction of group taxation elements departing from the separate-entity theory, as well as the introduction of a consolidated scheme, are considered as potential reform proposals.