In its study from 2001 the European Commission highlighted the main tax obstacles to cross border business activities in the European Union which hamper companies from exploiting the full benefits of the internal market. In order to remove or minimise these obstacles, the European Commission has launched proposals providing multinational companies with a common consolidated tax base for their EU-wide activities. As of yet, theoretical and technical issues regarding the tax accounting rules, the scope and mechanism of consolidation as well as affected legal forms of companies and types of taxes need to be resolved. Furthermore, it is also unclear, how the consolidated tax base is to be allocated among the involved countries and which consequences would arise for the corporate tax burden and tax revenue of member states. The objective of the research project is to develop detailed options for a consolidated base taxation of groups of companies in the European Union and to assess the resulting consequences for the tax burden of corporations as well as the allocation of tax revenues among Member States. Since existing quantitative approaches fall short of providing robust information on revenue and distribution effects, a microsimulation model will be developed which allows explicitly for this kind of policy analysis. The development of this model represents a considerable extension of the state of research. On the one hand, the results are of significance to the European Commission concerning the formulation of specific proposals in the design of the common consolidated corporate tax base. On the other hand, possible reform scenarios will entail financial and legal consequences for the Member States. Moreover the new tax base within the European Union would operate alongside and does not replace existing national systems. Competing businesses, local and international may thus be subject to either local tax or common base taxation. This will have effects on both national tax legislation and constitutive and functional economic decision processes of companies.