Abstract
Abstract This paper reflects the tabled novel framework for corporate taxation in the European Union, founded on the Formulary Apportionment methodology and envisaged inclusion of intangible assets in the allocation formula. The objective is to simulate the variation between the currently used Separate Accounting and tabled Formulary Apportionment distribution of corporate tax base of companies active in the European Union. This paper exploits secondary microeconomic panel data obtained from the Orbis database for 77,087 subsidiaries affiliated with 2,283 parent companies observed from 2011 to 2019. The results reveal that the most significant relative declines of over 15% in the corporate tax base would be faced by Luxembourg, Malta, Cyprus, the Netherlands, and Ireland. In contrast, the biggest relative gains were accounted for Greece, Romania, Hungary, Estonia, and Latvia. If cross-border consolidation of losses is incorporated in the envisaged corporate tax framework, the EU-wide aggregate tax base reduces by 15, 67% over the examined years.
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