European Union countries lose about 60 billion euros in tax revenues annually as a result of the transfer of profits from multinational companies to fiscal paradises, where tax rates are lower.
According to an analysis of the organisation ʹTax Justice Network, large corporations use favorable tax jurisdictions to declare profits instead of countries where they actually develop their economic activity.
The biggest losses suffer from France and Germany. France loses around 13.1 billion euros annually, while Germany loses 11.8 billion euros. Together, these two states account for 42 percent of the overall EU losses.
Among other affected countries are Spain, with 4.8 billion euros a year in losses, Poland with 4.7 billion and Belgium at 4.1 billion euros. Italy loses about 3.6 billion euros, while the Netherlands loses 3.5 billion euros.
A considerable part of these losses is related to British territories that serve as a fiscal paradise. According to the analysis, about eight billion euros from EU countries’ losses are linked to this network, including the British Virgin Islands, the Kayman Islands and Bermudtes.
The transfer of profits occurs when companies declare revenue in lower taxes, reducing the profit on which to pay taxes in the countries where they exercise their activity.
According to the Organization for Economic Co-operation and Development ( O The majority of these practices are not illegal, but they damage tax systems and lower state budget revenues.
The United Kingdom, which is estimated to lose some 14.7 billion euros a year, also suffers major losses from such practices.
On a global level, the damage is even greater. When undeclared assets of individuals in accounts abroad are included, losses from tax abuse are estimated at about 416 billion euros annually.
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