Formulary apportionment in international tax law

Formulary apportionment in international tax law

An allocation method for the age of globalization and digitalization

von Michael Mautsch

This thesis explores how global profits of multinational enterprises can be fairly taxed in the age of digitalization and globalization. It builds on the OECD/G20 Base Erosion and Profit Shifting initiative and the resulting two-pillar framework, which addresses the growing disconnect between value creation and taxation. Traditional profit allocation methods, such as transfer pricing based on the arm’s length principle, are increasingly ineffective and have enabled aggressive tax planning, leading to significant revenue losses for states. The author examines whether formula-based profit allocation can offer a more suitable approach, using examples from existing models in German, European, and international tax law. The paper ultimately advocates allocating global profits according to countries’ population sizes, assuming this reflects a sufficient economic nexus. Practical implementation is deliberately excluded from the scope of the study to focus on conceptual foundations.

Über den Autor

Michael Mautsch studied law from 2013 to 2020 at the University of Bonn (Rheinische Friedrich-Wilhelms-Universität Bonn) and at the University of Lausanne (Switzerland). He then completed his legal traineeship from 2020 to 2022 in the Higher Regional Court District of Cologne, including placements at the Federal Cartel Office in Bonn and the German Agency for International Cooperation in San José (Costa Rica). From 2022 to 2024, he worked as a research associate at the Chair of Public Law and Tax Law (Prof. Dr. Valta) at Heinrich Heine University Düsseldorf while pursuing his doctorate. He is currently employed in Bonn as an advisor at the Federal Central Tax Office (BZSt).

Michael Mautsch studierte von 2013 bis 2020 Rechtswissenschaften an der Rheinischen Friedrich-Wilhelms-Universität Bonn sowie an der Université de Lausanne (Schweiz). Anschließend absolvierte er von 2020 bis 2022 das Rechtsreferendariat im Bezirk des Oberlandesgerichts Köln, u.a. mit Stationen beim Bundeskartellamt in Bonn und der Gesellschaft für Internationale Zusammenarbeit in San José (Costa Rica). Von 2022 bis 2024 war er promotionsbegleitend als wissenschaftlicher Mitarbeiter am Lehrstuhl für Öffentliches Recht und Steuerrecht (Prof. Dr. Valta) an der Heinrich-Heine-Universität Düsseldorf tätig. Derzeit ist er in Bonn als Referent beim Bundeszentralamt für Steuern (BZSt) beschäftigt.