Corporate Social Responsibility and Corporate Tax Avoidance in Europe: Evidence From the Anti‐Tax Avoidance Directives

ABSTRACT This study examines the relationship between corporate social responsibility (CSR) and corporate tax avoidance (CTA) in the European Union, exploiting institutional variation arising from CSR disclosure regimes and the introduction of the Anti‐Tax Avoidance Directives (ATAD). Using a panel of 35,417 firm‐year observations from 2536 EU‐listed non‐financial firms over 2010–2023, the analysis combines multiple tax aggressiveness measures into a latent CTA construct and applies difference‐in‐differences and triple‐difference designs. Results show that CSR disclosure is systematically associated with lower tax avoidance, rejecting the decoupling hypothesis. By contrast, CSR performance displays a non‐linear relationship with CTA: low performers exhibit high avoidance that declines as performance improves; mid‐range performers show rising avoidance; and top performers again reduce CTA. The implementation of ATAD is significantly associated with reduced tax aggressiveness, with CSR‐reporting firms adjusting earlier and more uniformly, indicating complementarity between soft‐law CSR practices and hard‐law tax regulation. The findings suggest that CSR can support responsible tax behavior but highlight the need to integrate explicit tax transparency requirements into EU sustainability reporting frameworks.