Part 1 - AL-Tax

International Taxation Handbook8.5.4 Do European Member States compete on tax rates?A more basic question is whether EU Member States compete over corporatetaxes at all. Over the last 25 years, Europe has experienced declining statutory taxrates for both mobile bases and less mobile ones. As documented in Table 8.1,statutory corporate tax rates have sharply declined in most of the 25 EU MemberTable 8.1Statutory corporate tax rates (including local taxes and surcharges)Statutory corporate tax rates 1980 1990 1995 2000 2005(including local taxes and surcharges)Austria 55 39 34 34 25Belgium 48 41 40.17 40.17 33.99Cyprus n.a. 42.5 25 29 10Czech Republic n.a. n.a. 41 31 26Denmark n.a. 40 34 32 30Estonia n.a. n.a. 26 26 24Finland 59 41 25 29 26France 50 37 36.67 36.67 34.93Germany 52.8 57.7 56.8 51.63 38.29Greece 43.4 46 40 40 35Hungary n.a. 50 19.64 19.64 17.68Ireland 45 43 40 24 12.5Italy 36.3 41.8 52.2 41.25 37.25Latvia n.a. n.a. 25 25 15Lithuania n.a. 35 29 24 15Luxembourg n.a. 39.4 40.9 37.45 30.38Malta n.a. 32.5 35 35 35Netherlands 48 35 35 35 31.5Poland n.a. 40 40 30 19Portugal n.a. 36.5 39.6 35.2 27.5Slovak Rep. n.a. n.a. 40 29 19Slovenia n.a. n.a. 25 25 25Spain 33 35 35 35 35Sweden n.a. 40 28 28 28UK 52 34 33 30 30EU-15 average n.a. 40.4 38.0 35.3 30.4New Member States-10 average n.a. n.a. 30.6 24.8 18.2Source:IBFD (2005) and own calculations. Estonia: 0% on retained earnings.184