Today (1 March), the Greens/EFA Group in the European Parliament publishes a study on unfair tax competition. Using the example of the German Bayer AG, the study examines how large corporations save taxes by actively using and even promoting tax competition between municipalities and states within Europe. Previously, our group had already investigated BASF, IKEA, Zara and Veolia. However, more precise country-specific figures are difficult with Bayer and its 495 companies because the company is relatively intransparent. In 2019, Bayer had 66 of its 488 subsidiaries in international tax havens, including 27 in the Netherlands. In addition, of its 59 companies located in Germany, 15 were located in inner-German tax havens with particularly low local business taxes.
The new study shows that Bayer AG has been able to reduce its weighted nominal tax rate from 39.5 to 22 percent over the last 20 years. To achieve this, Bayer AG apparently uses easy to shift profits from intellectual property and real estate to persuade local policy makers to lower taxes at the community level. As a result of this competition with the Netherlands and nearby Monheim, Leverkusen (the location of Bayer’s headquarters) has cut its corporate tax rate by 8 percentage points to just 24.6 percent for 2020. Compared to local competitors the company has been able to reduce its effective tax rate by almost 10 percentage points. With this practice, Bayer AG has saved its shareholders around three billion euros in taxes over the last ten years. Bayer AG is by no means alone in this practice among large multinational companies.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:
“Bayer is a textbook example for ruinous tax competition in Europe. Bayer locations have become tax havens within the Union. This tax competition is poison for the common good. It is fatal that cash-strapped municipalities are forced to compete with each other, instead of working together to ensure that all businesses pay their fair share in taxes. Local businesses lose out in this unequal competition just as much as society as a whole. To counter this destructive race to the bottom, we need a uniform corporate tax system in Europe. The internal market needs harmonised, minimum tax rates to put an end to European tax competition. What is needed is a European corporate tax that reduces bureaucracy across borders and finances joint investments into our future. Instead of ruinous tax competition, we need fair competition between small and large companies throughout Europe.”
You can download the study following this link: https://sven-giegold.de/wp-content/uploads/2021/02/210226_FINAL-VERSION_Bayer-and-tax-study.pdf
P.S. Petition: Digital Tax Now! – Shops are closing, Amazon & Co are making huge profits without paying their fair share of tax: a digital tax must come now! Together we have the chance to finally overcome the blockade on the digital tax: Please sign our petition and share it with your contacts! https://www.change.org/digitaltax-now