ABSTRACT This thesis analyzes the corporate income tax, more specifically related to foreign sourced income, and proposes a solution to reduce the desirability of tax inversions and restore the competitiveness of United States’ corporations. The paper introduces the topic and discusses why corporate taxation has returned to the forefront of political discussion. It then addresses early 2000s regulation passed in response to increased inversion activity of the late ‘90s and how that regulation failed to achieve its intended purpose. Then, the current laws will be introduced with a focus on corporate actions to circumvent these laws in order to reduce tax liabilities. Then, I will propose a solution that emphasizes altering the incentives of corporations as opposed to creating rules to prevent corporate actions.

Member States' rules on the taxation of the foreign business income of companies, whether they are based on the fiscal principle of territoriality or on the principle of worldwide taxation, raise complex issues of compatibility with the law of the European Union. Areas of conflict include particularly the taxation of foreign profits, the deduction of foreign losses, the elimination of international double taxation, and the attribution of profits to permanent establishments. The dissertation analyses these conflicts on the basis of a study of the case law of the European Court of Justice. Although this analysis provides some guidance for the taxation of companies when they carry out business activities throughout the European Union, it is concluded that the Court cannot, by itself: solve the conflict between the taxation of business income in a cross-border context and the objective of achievement of the internal market. / Diss. Stockholm : Handelshögskolan i Stockholm, 2011