EU countries lose an estimated €59.3 billion a year to corporate profit shifting, with €8 billion linked to UK tax havens, the Tax Justice Network says .
The independent advocacy group published the analysis on Friday alongside the 5 November update to its Corporate Tax Haven Index. The €8 billion figure represents 13.6 percent of the EU total. Profit shifting occurs when companies record profits in lower-tax jurisdictions rather than where business activity takes place, often through payments between group companies such as interest or royalties.
The country figures cover 2022 and losses linked to multinational companies rather than individuals. France leads with an estimated loss of €13.1 billion, followed by Germany at €11.8 billion. Together they account for €24.9 billion, or 42 percent of the EU total.
Spain, Poland and Belgium each lose more than €4 billion, with estimated losses of €4.8 billion, €4.7 billion and €4.1 billion respectively. Italy, the Netherlands and Luxembourg each lose more than €3 billion. Ireland, Sweden and Austria each lose more than €1 billion.
Lithuania, Malta, Latvia, Estonia and Croatia have the lowest estimated losses, all below €100 million. Lithuania loses €59 million, Malta €61 million, Latvia €68 million, Estonia €73 million and Croatia €75 million.
The Tax Justice Network says this is the first time it has estimated losses linked to the UK network for each EU country. France has the highest share, with €2.8 billion, or 21.3 percent of its total losses, linked to the UK network. Germany follows with €1.4 billion, or 11.9 percent. Luxembourg loses €570 million, Spain €475 million, Poland and Italy €438 million each, and Belgium €415 million through the UK network.
In the Corporate Tax Haven Index, the British Virgin Islands, Cayman Islands and Bermuda rank first, second and third. Jersey ranks eighth, while Guernsey and the Isle of Man rank in the top 20. The UK itself ranks 19th. Together, the UK and these six jurisdictions account for 31 percent of global corporate tax abuse risk, rising to 33.3 percent when Gibraltar, Anguilla, the Turks and Caicos Islands and Montserrat are included.
The OECD says most such schemes are not illegal, although some are. It says these practices undermine the fairness of tax systems. They cost governments an estimated $100 billion to $240 billion a year globally, equivalent to 4 to 10 percent of global corporate income tax revenue.
