Income Shifting and Organizational Form Choice: Evidence from Europe

Arjan Lejour; Gabriella Massenz

Income Shifting and Organizational Form Choice: Evidence from Europe

Research output: Working paper › Discussion paper › Other research output

242 Downloads (Pure)

Abstract

We study the effect of differential taxation of personal and corporate tax bases on income shifting for 24 European countries over the pe- riod 2000-2016. The data cover 48 sectors at the 2-digit industry level. Our results provide evidence of significant income shifting via legal form choice. Specifically, a 1%-point increase in the tax differential between personal and corporate income tax rates results in a 0.8% increase in the corporate share of active firms and a 0.3% increase in the corporate share of employment. Moreover, we find that personal income tax revenues paid by self-employed decrease by about 0.3%.

Original language	English
Place of Publication	Tilburg
Publisher	CentER, Center for Economic Research
Number of pages	39
Volume	2020-013
Publication status	Published - 15 Apr 2020

Publication series

Name	CentER Discussion Paper
Volume	2020-013

Keywords

income shifting
corporate income tax
personal income tax
incorporation

Access to Document

2020-013Submitted manuscript, 544 KB

Connecting Organizations
Bekker, S. (Researcher), Bomer, A. (Researcher), Borghouts, I. (Researcher), De Pietro, C. (Researcher), Dusarduijn, S. (Researcher), Elsweier, F. (Researcher), Essers, P. (Researcher), Garcia Anton, R. (Researcher), Gribnau, H. (Researcher), Gubbels, N. (Researcher), Hoogeveen, M. (Researcher), Houwerzijl, M. (Researcher), Kaufmann, W. (Researcher), Kemmeren, E. (Researcher), Lafarre, A. (Principal Investigator), Lejour, A. (Researcher), Li, J. (Researcher), Loth, M. (Researcher), Mc Cahery, J. (Researcher), Montebovi, S. (Researcher), Peters, C. (Researcher), Rombouts, B. (Researcher), Russo, R. (Researcher), Staats, G. (Researcher), Starink, B. (Researcher), Steegmans, M. (Researcher), Stevens, S. (Researcher), Stevens, T. (Researcher), Sumner, I. (Researcher), Tjong Tjin Tai, E. (Researcher), Tzankova, I. (Researcher), Verbruggen, P. (Researcher), Vermeulen, E. (Researcher), Westerhout, E. (Researcher), Weterings, W. (Researcher), Wibier, R. (Researcher), Xu, D. (Researcher), Zegveld, C. (Researcher), Zekić, N. (Researcher), van Gulijk, S. (Researcher), van Hout, D. (Researcher), van Hulten, M. (Researcher), van Kempen, T. (Researcher), van Kesteren, H. (Researcher), van Vijfeijken, I. (Researcher), Van der Elst, C. (Researcher), Van der Sangen, G. (Researcher), Öner, C. (Researcher), Kryla-Cudna, K. (Researcher), Mak, V. (Researcher), Smit, D. (Researcher), Op Heij, D. (Researcher), Onţanu, E. A. (Researcher), Salah, O. (Researcher), Wijntjens, L. (Researcher), van Norden, G.-J. (Researcher), Vereijken-van den Bosch, S. (Researcher), Fernandez de Aranguiz Chueca, A. (Researcher), Diamant, Y. (Researcher), Geiregat, S. (Researcher), van der Burgt, B. (Researcher), Hofman, A. (Researcher) & Groeneveld-Tijssens, N. (Researcher)
1/01/19 → 31/12/23
Project: Research project

Cite this

@techreport{3138edefd6454113998131cd63172de3,

title = "Income Shifting and Organizational Form Choice: Evidence from Europe",

abstract = "We study the effect of differential taxation of personal and corporate tax bases on income shifting for 24 European countries over the pe- riod 2000-2016. The data cover 48 sectors at the 2-digit industry level. Our results provide evidence of significant income shifting via legal form choice. Specifically, a 1%-point increase in the tax differential between personal and corporate income tax rates results in a 0.8% increase in the corporate share of active firms and a 0.3% increase in the corporate share of employment. Moreover, we find that personal income tax revenues paid by self-employed decrease by about 0.3%.",

keywords = "income shifting, corporate income tax, personal income tax, incorporation",

author = "Arjan Lejour and Gabriella Massenz",

note = "CentER Discussion Paper Nr. 2020-013",

year = "2020",

month = apr,

day = "15",

language = "English",

volume = "2020-013",

series = "CentER Discussion Paper",

publisher = "CentER, Center for Economic Research",

type = "WorkingPaper",

institution = "CentER, Center for Economic Research",

}

TY - UNPB

T1 - Income Shifting and Organizational Form Choice

T2 - Evidence from Europe

AU - Lejour, Arjan

AU - Massenz, Gabriella

N1 - CentER Discussion Paper Nr. 2020-013

PY - 2020/4/15

Y1 - 2020/4/15

N2 - We study the effect of differential taxation of personal and corporate tax bases on income shifting for 24 European countries over the pe- riod 2000-2016. The data cover 48 sectors at the 2-digit industry level. Our results provide evidence of significant income shifting via legal form choice. Specifically, a 1%-point increase in the tax differential between personal and corporate income tax rates results in a 0.8% increase in the corporate share of active firms and a 0.3% increase in the corporate share of employment. Moreover, we find that personal income tax revenues paid by self-employed decrease by about 0.3%.

AB - We study the effect of differential taxation of personal and corporate tax bases on income shifting for 24 European countries over the pe- riod 2000-2016. The data cover 48 sectors at the 2-digit industry level. Our results provide evidence of significant income shifting via legal form choice. Specifically, a 1%-point increase in the tax differential between personal and corporate income tax rates results in a 0.8% increase in the corporate share of active firms and a 0.3% increase in the corporate share of employment. Moreover, we find that personal income tax revenues paid by self-employed decrease by about 0.3%.

KW - income shifting

KW - corporate income tax

KW - personal income tax

KW - incorporation

M3 - Discussion paper

VL - 2020-013

T3 - CentER Discussion Paper

BT - Income Shifting and Organizational Form Choice

PB - CentER, Center for Economic Research

CY - Tilburg

ER -

Income Shifting and Organizational Form Choice: Evidence from Europe

Abstract

Publication series

Keywords

Access to Document

Fingerprint

Projects

Connecting Organizations

Cite this