European Union member states are forfeiting an estimated €59.3bn in tax revenue each year as multinational corporations shift profits across borders, according to a new analysis by the Tax Justice Network. The organisation attributes roughly €8bn of that annual loss to the United Kingdom and its network of Overseas Territories and Crown Dependencies — a figure equivalent to 13.6% of the EU-wide total.
The findings, released alongside the 5 November update of the Corporate Tax Haven Index, underline the persistent role of British-linked jurisdictions in facilitating corporate tax avoidance. The UK and its six main associated territories — the British Virgin Islands, the Cayman Islands, Bermuda, Jersey, Guernsey and the Isle of Man — together account for 31% of the global corporate tax abuse risk measured by the index. Adding Gibraltar, Anguilla, the Turks and Caicos Islands and Montserrat pushes that share to 33.3%.
Profit shifting and its costs
Profit shifting occurs when companies record earnings in low-tax jurisdictions rather than where the actual business activity takes place. This often involves intra-group payments such as royalties or interest, which reduce taxable profits in higher-tax countries. While the OECD notes that most such schemes are not illegal, it estimates they cost governments worldwide between $100bn and $240bn (€89bn to €214bn) annually — equivalent to 4% to 10% of global corporate income tax revenue.
The Tax Justice Network’s country-level figures, covering 2022, focus exclusively on losses linked to multinational companies, not individuals. France tops the EU list with an estimated annual loss of €13.1bn, followed by Germany at €11.8bn. Together, these two economies account for €24.9bn, or 42% of the EU total.
Spain (€4.8bn), Poland (€4.7bn) and Belgium (€4.1bn) each lose more than €4bn, while Italy (€3.6bn), the Netherlands (€3.5bn) and Luxembourg (€3.2bn) exceed €3bn. Ireland (€2.2bn), Sweden (€1.6bn) and Austria (€1.1bn) all lose over €1bn. At the other end, Lithuania (€59mn), Malta (€61mn), Latvia (€68mn), Estonia (€73mn) and Croatia (€75mn) report the smallest losses, all below €100mn.
UK network’s disproportionate impact
For the first time, the Tax Justice Network has estimated how much each EU country loses specifically through profit shifting routed via the UK’s tax haven network. The combined loss is about €8bn, with France and Germany bearing the brunt. In France, the UK network is linked to €2.8bn in lost revenue — 21.3% of the country’s total corporate profit-shifting losses, the highest share in the EU. Germany loses €1.4bn, representing 11.9% of its total.
Other significant losses linked to the UK network include €570mn for Luxembourg, €475mn for Spain, €438mn each for Poland and Italy, and €415mn for Belgium.
The Corporate Tax Haven Index ranks jurisdictions based on the risk that their tax rules and financial activity enable multinationals to reduce tax elsewhere. It combines an assessment of legal frameworks with the scale of foreign direct investment flowing through each jurisdiction. Four British territories occupy the top three and eighth positions: the British Virgin Islands, the Cayman Islands, Bermuda and Jersey. Guernsey and the Isle of Man rank within the top 20, with the UK itself in 19th place.
The Crown Dependencies set their own tax rules, and tax policy in the British Overseas Territories is generally decided locally, although the UK retains powers to intervene — powers it rarely exercises.
Euronews Business contacted HM Treasury for comment on the findings but had not received a response at the time of publication.
UK also a major loser
Notably, the UK itself ranks among the countries most affected by corporate profit shifting. The Tax Justice Network estimates that the UK loses £12.8bn (€14.7bn) annually as multinationals move profits to tax havens worldwide, based on an average for 2018 to 2022.
Moran Harari, the Tax Justice Network’s index lead, said: “The Corporate Tax Haven Index continues to demonstrate the UK’s oversized role in the landscape of global corporate tax abuse risk. The UK and EU stand to gain the most from the changes the UN tax convention aims to deliver, but they remain opposed to them.”
Harari added: “They continue to hold on to the discredited and unscientific fantasy of ‘tax competition’, but our findings today again confirm that this only leads to a race to the bottom with no winners.”
The organisation argues that despite years of OECD-led efforts to curb corporate tax abuse, many countries still fail to require companies to disclose the basic information tax authorities need to detect profit shifting.
When wealthy individuals are included, the global picture worsens. The State of Tax Justice 2024 report estimates worldwide tax losses at €416bn ($492bn) annually, covering both corporate profit shifting and tax evasion through undeclared offshore wealth. Companies account for about 71% of that total.
