nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2007‒07‒20
two papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Tax revenues in the European Union: Recent trends and challenges ahead By Carone, Giuseppe; Nicodème, Gaëtan; Schmidt, Jan
  2. The Effect of Taxes on Royalties and the Migration of Intangible Assets Abroad By John H. Mutti; Harry Grubert

  1. By: Carone, Giuseppe; Nicodème, Gaëtan; Schmidt, Jan
    Abstract: The governments of the European Union are facing important challenges that may impact both their need and their capacity to collect taxes. First, ageing will increase some social spending while reducing the potential of some tax bases such as labour. Second, globalisation has the potential to increase the mobility of capital and of high-skilled workers, making it more difficult to rely on them as a source of revenues. Finally, the desire to shift tax away from labour and to make work pay while retaining the social models will force Member States to find alternative robust tax bases. This paper reviews the most recent trends in taxation in the European Union and discusses several tax policy issues in the light of those coming challenges.
    Keywords: Taxation; Welfare State; European Union; ageing; globalisation
    JEL: H20 H50 H10
    Date: 2007–07–11
  2. By: John H. Mutti; Harry Grubert
    Abstract: Migration of intangible assets from the United States to foreign countries has become easier due to the ability of U.S. firms to create hybrid entities in their affiliates abroad and to reach favorable cost sharing agreements with them. This strategy was particularly encouraged by the U.S. adoption of "check-the-box" regulations in 1997. Rather than receive royalties from affiliates abroad, US parent firms have an incentive to retain abroad in low-tax countries a greater share of the return to their US R&D. Evidence from several sources for years that span the 1997 policy change indicate a significant response by US corporations in utilizing this strategy. BEA data indicate affiliate earnings and profits grew more rapidly than royalty payments to US parents. Payments to U.S. parents for technical services rose even faster, as would be called for under cost sharing agreements. Regression analysis of affiliate data shows that parent R&D was a more important determinant of royalty payments to U.S. parents than it was for affiliate earnings and profits in 1996, but by 2002 it played a larger role in earnings and profits than in royalties. Cost sharing payments from affiliates in Ireland and from pure tax havens (Bermuda, the Cayman Islands, and Luxembourg) are particularly significant, both economically and statistically.
    JEL: F23 H32
    Date: 2007–07

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