Especially multinational corporations benefit more than average from tax privileges and tax loopholes in the European Union. This is the result of the new study “Effective Tax Rates of Multinational Enterprises in the EU” commissioned by the Greens/EFA Group in the European Parliament. The study is based on the best country-specific tax data available, the so-called Orbis database. The statutory corporate tax rate in the EU averages 23 percent, but companies pay only 15 percent on average. The substantial gap between nominal and effective tax rates results from special agreements between individual member states and multinational companies, tax loopholes such as patent boxes and the double non-taxation of profits due to imperfect double taxation agreements. As a result, the taxes actually paid by companies vary between two percent (Luxembourg) and 30 percent (Italy) depending on the EU Member State. In Germany, companies pay on average about 20 percent corporate taxes, while the statutory tax rate is about 30 percent. The evaluated data show that in most countries smaller, locally active companies are noticeably disadvantaged compared to cross-border groups: the larger the company, the lower the effective tax rate. The study highlights the need for greater tax transparency among EU Member States and for country-by-country reporting on tax practices and tax savings.
Sven Giegold, financial and economic spokesperson for the Greens/EFA Group, comments:
“It is unacceptable that the largest multinationals benefit most from tax dumping. Our study shows that there are still many hurdles to overcome in the fight against unfair tax practices in the European Union. Tax loopholes cost European taxpayers billions every year.
With more tax transparency, the European Member States would have additional billions for education, research and clean energy. We need transparency about the tax practices of transnational companies, and the European Commission’s proposal points in the right direction. A first step would be country-by-country reports on tax payments by global corporations such as Starbucks, Volkswagen and Apple. German Finance Minister Olaf Scholz must end his blockade of mandatory country-by-country tax transparency. In the year of the European elections, we must prove that the European Union is effectively working against tax dumping for the benefit of only multinational enterprises.”
Study “Effective Tax Rates of Multinational Enterprises in the EU”: