EU Loses €8 Billion in Taxes Through UK Offshore Network

Through the UK’s network of offshore centres, the EU loses €8 billion in tax revenue

According to estimates by the Tax Justice Network, EU countries lose around €59.3 billion in tax revenue each year because multinational companies shift profits across borders. The organisation attributes around €8 billion of these losses to the UK, its overseas territories and Crown dependencies, which is equivalent to 13.6 per cent of the EU’s total losses.

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Profit shifting can occur when companies report profits in jurisdictions with lower tax rates rather than where the actual business activity takes place.

The OECD notes that most such schemes are not illegal, although some of them do contravene the law. The organisation states that such practices undermine the fairness of tax systems and cost governments between $100 billion and $240 billion (€89 billion to €214 billion) a year, equivalent to between 4% and 10% of global corporate income tax revenue.

Which EU countries are losing the most tax revenue? France tops the list with estimated losses of €13.1 billion in 2022, the most recent year for which data is available, followed by Germany with €11.8 billion. Losses exceed €4 billion in Spain (€4.8 billion), Poland (€4.7 billion) and Belgium (€4.1 billion). In Italy (€3.6 billion), the Netherlands (€3.5 billion) and Luxembourg (€3.2 billion).

What proportion of the EU’s losses are attributed to UK tax havens?

The total losses are estimated at approximately €8 billion. France and Germany have the highest estimated losses linked to the UK network. In France, €2.8 billion – or 21.3 per cent of the country’s estimated losses from corporate profit shifting – is attributed to this network, the highest figure in the EU. In Germany, the corresponding figures are €1.4 billion and 11.9 per cent.

Estimated losses linked to the UK network amount to €570 million for Luxembourg, €475 million for Spain, €438 million each for Poland and Italy, and €415 million for Belgium.

Losses rise when high-net-worth individuals are taken into account

When high-net-worth individuals are taken into account, the estimated tax losses are significantly higher. The ‘State of Tax Justice 2024’ report, cited by Euronews, estimates global losses at €416 billion ($492 billion) per year. This figure covers both profit shifting by multinational corporations and tax evasion linked to the undeclared offshore wealth of high-net-worth individuals. Companies account for around 71 per cent of this amount.

This story was translated with the assistance of artificial intelligence.The translation was also reviewed by the Logos Press editorial team.

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