Home / Business and Economy / EU Loses €60bn Yearly to Corporate Tax Schemes
EU Loses €60bn Yearly to Corporate Tax Schemes
7 Nov
Summary
- EU countries face €59.3bn annual tax losses from profit shifting.
- UK network of tax havens linked to €8bn of EU's total losses.
- France and Germany lead EU nations with highest estimated tax revenue losses.
European Union countries are collectively losing an estimated €59.3 billion each year due to corporate profit shifting. Multinational companies are recorded as making profits in lower-tax jurisdictions, rather than where their business activities actually occur. This practice significantly reduces taxable profits in higher-tax countries.
The Tax Justice Network highlights that the UK and its associated tax havens are linked to roughly €8 billion of these annual losses, representing 13.6% of the EU's total. France and Germany bear the brunt of this issue, with estimated losses of €13.1 billion and €11.8 billion respectively in 2022, making up 42% of the EU's total.
Globally, the OECD estimates that such practices cost governments between $100 billion and $240 billion annually. The UK itself is estimated to lose approximately €14.7 billion yearly. British jurisdictions, including the British Virgin Islands, Cayman Islands, and Bermuda, rank highly on the Corporate Tax Haven Index, contributing significantly to global tax abuse risk.
While many profit-shifting schemes are not illegal, they undermine tax system fairness. The Tax Justice Network criticizes the continued reliance on discredited 'tax competition' models, arguing they lead to a 'race to the bottom' with no real winners.
