This project explores more widely the economic consequences of proposed EU reforms for a Common Consolidated Corporate Tax Base. To take the analysis further, we use a numerical computable general equilibrium (CGE) model for the EU. This model encompasses several decisions of companies such as the scale of investment, location decisions, and profit shifting. Simulations using the model suggest that consolidation does not yield substantial welfare gains for Europe: there is considerable variation in the effects across countries. The effects of consolidation with formula apportionment, as in the CCCTB, depend on the choice of the apportionment formula. The CCCTB does not weaken incentives for tax competition.
Michael Devereux and Simon Loretz