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Tax authorities and businesses in the EU are preparing for the implementation of the minimum corporate tax ('Pillar Two'), following the milestone global agreement reached in the OECD Inclusive Framework in 2021. Questions have however been raised as to the extent to which countries should reform their tax incentives, in a world where the global minimum corporate tax can undermine such incentives.

This study analyses the design and functioning of windfall profit taxes for energy suppliers in the EU. Based on profit data from 2021, the estimated revenue gains from the solidarity contribution amount to 4.4 bn EUR for the selected sample of firms. Applying the revenue cap to power prices of 2022 suggests a tax revenue of 106 bn EUR. The actual tax revenue might diverge substantially from these numbers due to different energy price levels during the application period. The revenue can be redistributed ...

This study aims at quantifying and comparing tax compliance costs burdening private businesses in the European Union by reviewing the available empirical literature and data with a focus on small and medium-sized enterprises. Data as well as methodological challenges are discussed and used to identify best-practice tax systems in Europe. We highlight differences in compliance costs met by firms of differing sizes, engaging or not in cross-border trade and for different tax types.

While shell companies – company entities that have no or minimal economic activity – can serve useful commercial and business functions, they are sometimes abused by companies or individuals for aggressive tax planning or tax evasion. To ensure sustainable public finances under the exceptional circumstances imposed by the COVID-19 pandemic, in December 2021 the European Commission presented a directive on preventing shell companies from misusing their structure for tax purposes ('Unshell'). The proposal ...

If implemented in the EU and globally in 2024, the two-pillar agreement reached in 2021 by 137 countries as part of the OECD Inclusive Framework will change international corporate tax rules significantly. In the meantime, the European Commission is preparing to relaunch the idea of an EU common consolidated corporate tax base (BEFIT), which should build on the foundation laid by the OECD agreement.

While Luxembourg is one of the smallest EU Member States in terms of size and population, it is a major European and global financial hub, which plays a key role for investment flows across the EU and provides banking and insurance services to businesses and households. At the same time, Luxembourg has been criticised for its corporate tax framework, which businesses or high net-worth individuals may be employing for abusive tax purposes. In particular, following on from the 'Luxleaks' files, which ...

While business tax incentives are used widely, concerns have been raised in recent years regarding their effectiveness, their impact on public finances and whether they could potentially distort the EU single market. With important innovation challenges ahead relating to the green and digital twin transition, tax incentives are increasingly being used to boost investment in the area of research and development.

As Ireland has a high number of (foreign-owned) multinationals, which employ a large share of the Irish workforce, the country's corporate tax system plays a key role in the economy. However, Ireland has been criticised for the way in which its tax system has been used by multinationals to set up aggressive tax planning structures and exploit mismatches and gaps in the international tax framework. In response, Ireland has taken a series of anti-tax avoidance measures at national, EU and OECD level ...

Two European Added Value Assessments (EAVAs) studies on Value Added Tax (VAT) and Corporate Income Tax (CIT) for the European Parliament's subcommittee on Tax Matters (FISC), identified the gaps in EU legislation in these areas and evaluated the European added value of various policy options to address these gaps.

This study analyses the gaps and challenges in the EU corporate income tax (CIT) legislation, and evaluate the European Added Value (EAV) of potential policy options to address these challenges. A thorough comparative economic analysis is made of the EAV of a series of scenarios, based upon the policy options identified. The results confirm that complexity remains by far the greatest factor behind both the CIT gap and the high level of compliance costs for businesses. Insufficient transparency, lack ...