Effective Tax Burden in Europe: Current Situation, Past Developments and Simulations of Reforms

Executive Summary. - 1.1 Background, aim and structure of the study. - 1.2 Methodological concept of the European Tax Analyzer. - 1.3 Tax parameters incorporated into the model. - 1.4 Structure of the model-firm and other economic assumptions for the base case. - 2 Comparison of the effective tax burden over a ten year period for a base case scenario assuming the tax regimes for the fiscal year 1999. - 2.1 Tax burden at the level of the corporation. - 2.1.2 Overview of results. - 2.1.2 Impact of different taxes on the effective average tax burden. - 2.1.2.1 Overview. - 2.1.2.2 Corporation tax. - 2.1.2.2.1 Tax bases (computation of taxable income). - 2.1.2.2.2 Tax rates. - 2.1.2.3 Trade tax on income and other taxes on corporate income. - 2.1.2.4 Non profit taxes. - 2.1.2.4.1 Real property tax (real estate tax). - 2.1.2.4.2 Property taxes. - 2.1.2.4.3 Other non-profit taxes. - 2.2 Tax burden at the overall level (corporation and domestic shareholders). - 2.2.1 Relevance of shareholder taxation (personal taxes). - 2.2.2 Comparison and analysis of results. - 2.2.2.1 Corporation tax systems. - 2.2.2.2 Income tax rates. - 2.2.2.3 Capital taxes. - 2.3 Conclusions. - 3 Sensitivity analysis. - 3.1 Primary remarks. - 3.1 Level of the corporation. - 3.2.1 Investment policy. - 3.2.2 Structure of finance. - 3.2.3 Profitability. - 3.2.4 Different industries. - 3.3 Overall level (corporation and domestic shareholders). - 3.3.1 Dividend policy. - 3.3.2 Equity to total capital ratio. - 3.4 Conclusions. - 4 Effects of the German tax reform 2001. - 4.1 Description of major tax changes. - 4.2 Changes of the tax burden at the level of the corporation. - 4.2.1 Base case scenario. - 4.2.2 Different industries. - 4.3 Changes of the tax burden at the overall level (corporation and domestic shareholders). - 4.4 Conclusions. - 5 Changes of the effective average tax burden since 1995. - 5.1 Changes of the tax burden at the level of the corporation. - 5.2 Changes of the tax burden at the overall level (corporation and domestic shareholders). - 5.3 Conclusions. - 6 Impact of hypothetical tax reforms in the EU. - 6.1 Overview on simulations. - 6.2 Reforming the corporation tax bases. - 6.3 Reforming the corporation tax rates and the local taxes. - 6.4 Reforming the corporation tax systems. - 6.5 Conclusions 85. - 7 Comparison of the European Tax Analyzer results with those obtained by the Devereux-Griffith model. - 7.1 Problems inherent in comparing results obtained by different approaches. - 7.2 Comparison of the effective tax burdens for the base case scenarios. - 7.2.1 Level of the corporation. - 7.2.2 Overall level (corporation and domestic shareholders). - 7.3 Effects of the German tax reform 2001. - 7.4 Effects of hypothetical tax reforms in the EU. - 7.5 Conclusions. - 8 Final conclusion. - References. - Appendix A: Financial ratios of the different industries. - Appendix B: Detailed results for the base case (section 2) and the sensitivity analysis (section 3) including the German Tax reform 2001 (section 4). - Appendix C: Changes of the effective average tax burden since 1995 (section 5). - Appendix D: Impact of hypothetical tax reforms in the EU (section 6). - List of Figures. - List of Tables.