National Tax Policy in Europe

Transcription

1 National Tax Policy in Europe

2 Krister Andersson Eva Eberhartinger Lars Oxelheim (Eds.) National Tax Policy in Europe To Be or Not to Be? With 15 Figures and 13 Tables ABC

3 Krister Andersson Confederation of Swedish Enterprises Storgatan Stockholm Sweden Eva Eberhartinger, LL.M Vienna University of Economics and Business Administration Department of Finance and Accounting Tax Management Group Althanstraße Vienna Austria Lars Oxelheim Lund Institute of Economic Research P.O. Box Lund Sweden and The Research Institute of Industrial Economics P.O. Box Stockholm Sweden Library of Congress Control Number: ISBN Springer Berlin Heidelberg New York This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer. Violations are liable for prosecution under the German Copyright Law. Springer is a part of Springer Science+Business Media springer.com c Springer-Verlag Berlin Heidelberg 2007 The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Typesetting: Integra Software Services Pvt. Ltd., Puducherry, India Cover design: WMX Design, Heidelberg Printed on acid-free paper SPIN:

4 Preface European taxes have long been debated for their potential role as barriers to increased investment and welfare. The discussion has often circulated around the size of the tax bases and the magnitude of the tax rate. In this book we argue that in the taxation context the European Union (EU) is at a cross-road facing strong forces pushing it into two polar positions. One of these is the scenario with all welfare provided by the national regime and financed by taxes collected entirely by national authorities. The other extreme is the situation where all welfare is offered at an EU level financed entirely by taxes collected at that level. The two forces pressing the tax situation into one of these two poles are spelt tax competition and welfare arbitrage. The research question addressed in this book covers the existence of a potential steady state in between these to poles. Our basic hypothesis is that their might be such a steady state due to the immobility of some tax bases and where the taxation of these bases have no externalities affecting investment. We argue that the very complex tax structures of Europe and the tax uncertainty facing investors in Europe need to be addressed in a comprehensive way. A crucial part of such an analysis is the need for the issues to be discussed in an interdisciplinary way containing aspects in terms of traditional academic principles from Economics to the Political and Legal sciences. The interdisciplinary approach required for a proper analysis of the multidimensional tax concept and its application makes most traditional scientific journals less well fitted as outlet for the result of such an analysis. This motivates why the results are here presented in the form of a book. The process behind the book was similar to that behind refereed journals. Following presentation of the main ideas of the project along the lines now appearing in Chapter 1, a number of researcher teams were invited to contribute and to address different parts of the research question while maintaining a European perspective. First drafts were discussed at a workshop held at the Trolleholm Castle in the south of Sweden in January Each contribution was refereed by two of the participating contributors to the book in addition to the editors and then discussed at a seminar during the three day meeting where the appointed referees acted as discussant. A second draft of each chapter was discussed at the annual European Integration conference of the Swedish Network for European Studies in Economics and Business (SNEE) in Mölle in May, Also on this case, each contribution had two appointed discussants. The final manuscript was then delivered to us at the end of February Our greatest gratitude now goes to all those who have contributed different chapters and participated in the Trolleholm workshop and the Mölle conference. We are grateful for their efforts and constructive attitudes in working with their

5 VI Preface own chapters, but also in reading and commenting on the other contributions. We would also like to thank colleagues at our home universities and at places where we are affiliated for their contribution in one way or the other. We are most thankful to the SNEE for providing necessary support, particularly for the three-day workshop at Trolleholm. SNEE s support made it possible to bring together scholars from many countries and to develop this network of colleagues doing research on European taxation issues. Stockholm, Vienna and Lund in March 2007 Krister Andersson Eva Eberhartinger Lars Oxelheim

6 Table of Contents List of Contributors... XI 1. The Role of National Tax Policies in the European Union...1 Krister Andersson, Eva Eberhartinger and Lars Oxelheim 1.1 Introduction Taxation and the Changing Economic and Legal Environment Research on National Tax Policy Content and Structure of the Book Preview of Conclusions...9 Reference Corporate Income Tax Competition and the Scope for National Tax Policy in the Enlarged Europe...11 Christian Bellak and Markus Leibrecht 2.1 Introduction Definitions and Preconditions of Tax Competition Measures of the Tax Burden on Corporate Income Changes in the CEECs Corporate Income Taxation Between 1995 and Empirical Results on Tax-Rate Elasticities of FDI in the CEEC Should and Will There Be a Scope for National Tax Policy Within the EU in the Future? References Free Factor Mobility and Fiscal Competition: Can the National Welfare State Survive in a United Europe? Åsa Hansson 3.1 Introduction The Welfare State in Europe The Threat to the National Welfare State in Europe from Free Factor Mobility What Can and Should Be Done to Protect The National Welfare State? Concluding Remarks on the Survival of the Welfare State in a United Europe References

7 VIII Table of Contents 4. Fiscal Competition and Activist Social Policy... Ulrike Schneider and August Österle 4.1 Introduction United We Stand Diverse We Move When Social Policy Goes Limbo Dancing: Fiscal Competition and the Welfare State The Tail Wags the Dog: Passive Integration of Social Policy Can the Horse Get Back in Front of the Cart Again? Options for Active Integration Concluding Remarks on European Tax Competition and Social Policy Integration References An Optional Common Consolidated Corporate Tax Base in the European Union Krister Andersson 5.1 Introduction Business Taxation in Europe Tax Policy in the New Member Countries Challenges in the Corporate Tax Area Reforming Corporate Taxation in the E U CCCTB Economic, Legal and Cultural Barriers to a Common Business Taxation Concluding Remarks on a Common Consolidated Corporate Tax Base in Europe References The Influence of the European State Aid Rules on National Tax Policy... Franz Philipp Sutter 6.1 Introduction The State Aid Prohibition af Art 87 EC and its Development into a Sort of European Equality Test for National Business (Tax) Legislation The EC State Aid Control and its Direct Impact on National Law The Political Dimension of the European State Aid Rules and Their Implications for National Tax Policy Concluding Remarks on the Role of European State Aid Rules on National Tax Policy References The European Court of Justice and Direct Taxation: A Recent Change of Direction? Mattias Dahlberg 7.1 Introduction Background Objectively Comparable Situations

8 Table of Contents IX 7.4 Grounds of Justification in the General Interest Critique of the Structural Attempt by AG Geelhoed On Pending and Forthcoming Cases Before the European Court of Justice Concluding Remarks on the Change of Direction of the European Court of Justice References Tax Treaty Policy Michael Lang 8.1 Introduction Room for Tax Treaty Policy under EC Law Room for Domestic Tax Policy under Tax Treaty Law Concluding Remarks on the Tax Treaty Policy References National Tax Policy, the Directives and Hybrid Finance Eva Eberhartinger and Martin Six 9.1 Introduction Hybrid Finance - The Problem The Implementation of the Directives into National Law The Parent-Subsidiary Directive The Interest and Royalties Directive Hybrid Finance in the Directives Concluding Remarks on Hybrid Finance and National Tax Policy References The Room for National Tax Policy in the Future Europe Krister Andersson, Eva Eberhartinger and Lars Oxelheim 10.1 Introduction Trends and Tendencies for National Tax Policy Features of a Sustainable Room for National Tax Policy the Steady State Reference Index...247

9 List of Contributors Krister Andersson is Head of the Tax Policy Department, Confederation of Swedish Enterprise. Since 2005, he has been Chairman of the Fiscal Affairs Group of BUSINESSEEUROPE (formerly the UNICE), Brussels. He served as an expert to the European Commission on its Corporate Tax Study (published in 2001). He is assistant professor (Docent) in Economics at Lund University and he has worked for the International Monetary Fund and as Chief economist of the Swedish Central Bank. He is a board member of the Swedish National Tax Authority, the Swedish IFA branch, and the Association of Industry Treasurers. He is also a member of the BIAC Taxation and Fiscal Policy Committee and the International Chamber of Commerce Tax Commission, in Paris. Christian Bellak is associate professor at the Vienna University of Economics and Business Administration in Vienna. His research interests are centered around foreign direct investment, industrial and tax policy, internationalization, international business and multinational enterprises. Dr. Bellak s research within these areas has appeared in numerous books, and in journals such as Oxford Bulletin of Economics and Statistics, Journal of International Money and Finance, Transnational Corporations, and Applied Economics. He has also acted as advisor on industrial policy to UNCTAD, The World Economic Forum and to various committees and working groups within the Austrian federal administration. Mattias Dahlberg is professor of finance law at Uppsala University in Uppsala, Sweden. His main research area is European tax law, and recent publications include the book Direct Taxation in Relation to the Freedom of Establishment and the Free Movement of Capital (Kluwer Law International, 2005). His previous articles and notes have appeared in major tax law outlets, such as European Taxation, Cahier de Droit Fiscal International, Scandinavian Studies in Law, and Intertax. Professor Dahlberg is the editor of the Swedish tax law journal Skattenytt, and has previously held positions at the Stockholm School of Economics. Eva Eberhartinger is professor and Head of the Tax Management Department at the Vienna University of Economics and Business Administration. Her research focuses on international taxation, finance and taxation, tax management, and international and European financial reporting. Her research within these areas is published in numerous articles and shorter commentaries in Austrian and international professional and academic journals, and as chapters in books, and she is the author or (co)editor of over a dozen books. Professor Eberhartinger has spent time as a visiting researcher at the University of Illinois at Urbana-Champaign (USA), the University of Exeter (GB), the Ecole des Hautes Etudes Commerciales (HEC)

10 XII List of Contributors in Paris, and at McGill University in Montreal. Before assuming her present position in Vienna, she was professor at the University of Münster, Germany. Åsa Hansson is assistant professor in economics at the Department of Economics at Lund University, fellow researcher at the RATIO institute, and currently visiting the Department of Economics at Copenhagen University. Åsa s main research interest is in economics of taxation. She has written and published on topics ranging from the effects of taxes on the macro economy (e.g., growth and employment) to how taxation affect individuals and firms behavior, as well as several papers studying the effect of globalization on taxes and public spending. Michael Lang is professor and Head of the Department of Austrian and International Tax Law at the Vienna University of Economics and Business Administration. He is the author of more than 300 journal articles, book contributions, and commentaries, and author or (co)editor of numerous research monographs. He is also editor of a number of professional journals and book series on Austrian and international tax law. Other professional activities include the presidency of the Austrian branch of the International Fiscal Association, and membership of the Academic Committee of the European Association of Tax Law Professors. Between 2000 and 2004, he was a partner with Deloitte Austria. Professor Lang has won several awards for teaching excellence and for academic achievements, and has held visiting positions at Université de Paris I (Sorbonne), and the New York University School of Law. Markus Leibrecht is assistant professor at the Vienna University of Economics and Business Administration in Vienna, Austria. He specializes in the areas of public finance and applied econometrics. Dr. Leibrecht s research has appeared in books as well as in journals such as Applied Economics, Open Economies Review, Structural Change and Economic Dynamics, Applied Economics Letters and Austrian Journal of Statistics. August Österle is associate professor at the Vienna University of Economics and Business Administration in Vienna. His research interests include the economics of ageing, health economics, economic and social policy, and European integration, and he is the author of a half-dozen books and numerous journal articles and book chapters within these areas. Dr. Österle has previously held visiting positions at the University of Bath and the London School of Economics and Political Science, UK, and a Jean Monnet Fellowship at the European University Institute in Florence, Italy. He is the recipient of several awards both for his teaching and for his research. Lars Oxelheim holds a chair in International Business and Finance at Lund University, Lund, and is an affiliate of the Research Institute of Industrial Economics, Stockholm and of the Fudan University, Shanghai. His current research focuses on the implications of macroeconomic disturbances for corporate performance and issues related to economic and financial integration. He has published some 25 books and numerous articles in the areas of international business and finance, corporate finance and corporate governance. Among his recent

11 List of Contributors XIII monographs in English are European Union and the Race for Foreign Direct Investment in Europe (Elsevier, 2004; co-edited/authored with Pervez Ghauri), Corporate and Institutional Transparency for Economic Growth in Europe (Elsevier, 2006; edited/co-authored), and Corporate Performance and the Exposure to Macroeconomic Fluctuations (Oxford University Press, 2007; with Clas Wihlborg). Ulrike Schneider is professor of Economic Theory and Economic Policy at the Vienna University of Economics and Business Administration, where she also acts as Director of the research institute for the Economics of Ageing. Her areas of expertise include the economics of ageing, social policy, health economics, and nonprofit organizations, and she has published widely within these areas. An award-winning teacher, Professor Schneider has held numerous visiting positions, including the University of California at Berkeley, Johns Hopkins University, and the University of Maryland. Martin Six is a researcher at the Vienna University of Economics and Business Administration, specializing in industrial tax management, finance and taxation, reorganization tax law, and balance sheet analysis. He currently participates in the research projects International taxation of hybrid finance and International Tax Co-ordination, and his recent publications have concerned company valuation and cross-border financing. Franz Sutter holds a doctorate of law from the University of Vienna, Austria, and currently works as a lawyer with the Austrian Federal Ministry of Finance, and as adjunct lecturer at the Vienna University of Economics and Business Administration. As an expert on European state aid law and on Austrian, international and European tax law, Dr. Sutter has represented the Republic of Austria in procedures before the Austrian Constitutional Court and the European Court of Justice in tax matters. He is the author of numerous articles and notes on tax law. He is also the Austrian correspondent of European Taxation.