CORPORATE TAX STRUCTURES NOTES
INTRODUCTION TO THE COURSE
Week 1: Introduction
Week 2: Fundamentals of EU Law
Week 3: Tax liability
Week 4 and 5: Tax treatment of debt and equity
Week 6 and 7: Avoidance of double (non) taxation within groups
Week 8 and 9: Mergers
Week 10: Group taxation
Week 11: Tax incentives and State aid
Lecture 1: Introduction
Main topics covered:
• tax liability
• the treatment of debt and equity
• CFC-regimes
Exam:
• closed-book - 100% - open questions
Books:
Ben J.M. Terra and Peter J. Wattel , European Tax Law, Student Edition (2022 edition),
1
,Volume 1 (General Topics and Direct Taxation), referred chapters.
Peter Harris, Corporate Tax law: Structure Policy and Practice, Cambridge Tax law Editions
(2024 edition) referred chapters
What is a corporation?
• legal entity
• has its own legal personality
• own assets, income
• own rights and obligations
• responsible for debts and liabilities
• can directly enter legal relations (contracts, litigations)
• separate from shareholders
Corporate income tax (CIT)
• shareholders: get dividend -> dividend = remuneration for investment, personal income
tax
• company: corporate income tax
Why tax corporations?
• tax business profits of a corporation
• tax capital income
1. If tax a natural person, why not taxing a legal entity? (comparison with PIT)
2. Benefit principle -> corporations also benefit from public goods
3. Combat tax avoidance -> if no corporate tax, what if shareholders keep all the profits in
the corporation, no dividend distribution? Tax avoidance?
4. For tax administration -> it it easier to tax a company than taxing many shareholders in
different countries
5. Budget argumentation -> the government needs money
CIT: contribution to total revenue
2
,Economic double taxation
• the same income (business profits) is taxed twice: (1) at the level of the company (CIT)
and (2) at the level of shareholders (PIT)
example:
3
, -> Solution:
• reduce CIT
• deduction of dividend distribution
• Belgium, Italy, Portugal
• reduce PIT
• tax credit of PIT for CIT
• US, NL, Germany, France
Economic aspects of corporate tax
1. Efficient to collect revenue at source (+)
• easier to collect at company’s level
• easier for the administration to tax smaller number of companies than
individuals
2. Economic distortions (-)
• affect financial and investment decisions
• corporate finance: debt vs equity
• place of investment
• international profit sharing and tax avoidance
Tax neutrality:
• The design of tax law/policy should minimize its impact on corporations’ business
decisions
• Investment decisions, business structures, corporate activities
• Should be driven by the return of profits , Not by tax treatment!
example:
• CIT rate : NL - 25.8%; Ireland - 12.5% -> Which do you prefer as a company?
4
INTRODUCTION TO THE COURSE
Week 1: Introduction
Week 2: Fundamentals of EU Law
Week 3: Tax liability
Week 4 and 5: Tax treatment of debt and equity
Week 6 and 7: Avoidance of double (non) taxation within groups
Week 8 and 9: Mergers
Week 10: Group taxation
Week 11: Tax incentives and State aid
Lecture 1: Introduction
Main topics covered:
• tax liability
• the treatment of debt and equity
• CFC-regimes
Exam:
• closed-book - 100% - open questions
Books:
Ben J.M. Terra and Peter J. Wattel , European Tax Law, Student Edition (2022 edition),
1
,Volume 1 (General Topics and Direct Taxation), referred chapters.
Peter Harris, Corporate Tax law: Structure Policy and Practice, Cambridge Tax law Editions
(2024 edition) referred chapters
What is a corporation?
• legal entity
• has its own legal personality
• own assets, income
• own rights and obligations
• responsible for debts and liabilities
• can directly enter legal relations (contracts, litigations)
• separate from shareholders
Corporate income tax (CIT)
• shareholders: get dividend -> dividend = remuneration for investment, personal income
tax
• company: corporate income tax
Why tax corporations?
• tax business profits of a corporation
• tax capital income
1. If tax a natural person, why not taxing a legal entity? (comparison with PIT)
2. Benefit principle -> corporations also benefit from public goods
3. Combat tax avoidance -> if no corporate tax, what if shareholders keep all the profits in
the corporation, no dividend distribution? Tax avoidance?
4. For tax administration -> it it easier to tax a company than taxing many shareholders in
different countries
5. Budget argumentation -> the government needs money
CIT: contribution to total revenue
2
,Economic double taxation
• the same income (business profits) is taxed twice: (1) at the level of the company (CIT)
and (2) at the level of shareholders (PIT)
example:
3
, -> Solution:
• reduce CIT
• deduction of dividend distribution
• Belgium, Italy, Portugal
• reduce PIT
• tax credit of PIT for CIT
• US, NL, Germany, France
Economic aspects of corporate tax
1. Efficient to collect revenue at source (+)
• easier to collect at company’s level
• easier for the administration to tax smaller number of companies than
individuals
2. Economic distortions (-)
• affect financial and investment decisions
• corporate finance: debt vs equity
• place of investment
• international profit sharing and tax avoidance
Tax neutrality:
• The design of tax law/policy should minimize its impact on corporations’ business
decisions
• Investment decisions, business structures, corporate activities
• Should be driven by the return of profits , Not by tax treatment!
example:
• CIT rate : NL - 25.8%; Ireland - 12.5% -> Which do you prefer as a company?
4
