Group taxation in Europe (part 1)

Project directors

  • Prof. Dr. Andreas Oestreicher
  • Prof. Dr. Christoph Spengel
  • Prof. Dr. Dietmar Wellisch

Participating research assistants

  • Dipl.-Wirtsch.-Inf. Michael Grünewald
  • Dipl.-Kfm. Dominic Paschke
  • Dipl.-Kfm. Andreas Poppe
  • Dipl.-Kffr. Heike Riesselmann
  • Dipl.-Kfm. Carsten Wendt


1.1.2005 - 31.12.2007

Funded by

  • German Research Foundation

Co-operating partners

  • Centre for European Economic Research (ZEW), Mannheim
  • International Tax Institute, Universität Hamburg


The coexistence of the European tax systems distorts locational, investment and financing decisions and hinders the cross-border business activities of companies within the EU. The European Commission wishes to overcome these distortions and hindrances with the help of a consolidated corporate tax base. When the project was initiated, it was not clear which alternatives exist for the design of a framework for group taxation (tax base, consolidation method, consolidated entities as well as the legal forms and tax laws concerned), how the overall result should be apportioned, and what consequences arise for the tax burden of companies and the member states’ tax revenues. The research project’s objective was to develop options for a consolidated taxation of affiliated groups in the EU and to assess the consequences for the tax burden of companies and the distribution of tax revenue across the member states. Firstly, the findings are of conisderable interest from a methodological point of view since the profit distribution of multinational companies would be subject to a paradigm shift from the direct to the indirect method. Secondly, they are significant for the European Commission as far as the formulation of concrete proposals for corresponding rules is concerned. Thirdly, the member states are affected by the legal and financial consequences resulting from the influence on the cross-national distribution of tax revenue and the impact on domestic tax law. Fourthly, a consolidated corporate tax base means a change in the basic conditions for companies which will have a substantial effect on their fundamental and functional decision-making processes.