Strategic consolidation under formula apportionment

Beitrag in einer Fachzeitschrift

Details zur Publikation

Autorinnen und Autoren: Büttner T, Runkel M, Riedel N
Zeitschrift: National Tax Journal
Verlag: Nta-tia National Tax Association
Jahr der Veröffentlichung: 2011
Band: 64
Heftnummer: 64
Seitenbereich: 225-254
ISSN: 0028-0283


This paper argues that profit-shifting activities exist for multi-jurisdictional enterprises (MJEs) under a tax system of consolidation and formula apportionment (FA). A theoretical model discusses how a MJE can exploit strategically its impact on the definition of the consolidated group. The analysis shows that the MJE will not consolidate if intra-group tax-rate differences - and thereby potential gains from profit shifting - are large. We test this prediction using confidential firm-level tax-return data for the local business tax in Germany. The identification strategy exploits a quasi-experiment derived from a major company tax reform in 2001 that significantly reduced the costs associated with separating out individual affiliates. Our results show that, evaluated at the sample mean, an increase in the tax-rate variance among a MJE's affiliates by one standard deviation reduces the number of consolidated affiliates by 20 percent.

FAU-Autorinnen und Autoren / FAU-Herausgeberinnen und Herausgeber

Büttner, Thiess Prof. Dr.
Lehrstuhl für Volkswirtschaftslehre, insbesondere Finanzwissenschaft

Einrichtungen weiterer Autorinnen und Autoren

Otto-von-Guericke-Universität Magdeburg
Universität Hohenheim


Büttner, T., Runkel, M., & Riedel, N. (2011). Strategic consolidation under formula apportionment. National Tax Journal, 64(64), 225-254.

Büttner, Thiess, Marco Runkel, and Nadine Riedel. "Strategic consolidation under formula apportionment." National Tax Journal 64.64 (2011): 225-254.


Zuletzt aktualisiert 2018-07-08 um 23:56