Corporations ′failing to pay proper tax rates′ in EU | News | DW | 22.01.2019

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Corporations 'failing to pay proper tax rates' in EU

An investigation by the Greens in the European Parliament has shown big companies throughout the bloc are failing to pay their statutory taxes. The party has called for more social responsibility.

The only state in the EU where big corporations pay the statutory rate of tax is Bulgaria. In all other states, they pay, on average, less than the official rate.

Those are among the key findings in a report is to be presented in Brussels Tuesday by the Green party in the European Parliament in Brussels. The party's finance spokesman Sven Giegold called for more transparency about the tax practices of multinational companies.

"The European Commission has presented a good proposal for tax transparency by large corporations," Giegold said. "[German] Finance Minister Olaf Scholz must now give up on his blockade and advocate country-specific tax transparency."

Using the Orbis database with information from 2011 to 2015, the report was compiled by tax expert Petr Jansky of Charles University in Prague for the Greens. The results showed huge differentials between the statutory tax obligations and the actual amounts paid, according to German daily Süddeutsche Zeitung on Tuesday.

Read more: France to tax tech giants from 2019 as EU fails to act

Sven Giegold with Ska Keller at the Greens conference in Leipzig

Sven Giegold with Ska Keller at the Greens conference in Leipzig

Luxembourg tops the list

Luxembourg stood out in the study, where the official tax rate is 29 percent, but corporations paid only 2 percent on average.

Hungary, the Netherlands and Austria were also highlighted as states where actual taxes paid were significantly lower than the official rates.

Germany was just above average, with a tax rate of 30 percent but an average of 20 percent paid by major corporations.

In Greece and Ireland, it appeared corporations were paying more than their dues: Greece has a tax rate of 24 percent with corporations paying an average of 28 percent, and in Ireland, with a tax rate of 13 percent, corporations were paying 16 percent according to the study.

Ireland's low tax rates attract big corporations

EU wide tax rates

The Greens' Giegold said the EU must show voters ahead of the May elections that it is doing something effective against dubious fiscal practices.

The Greens' report also made the case against country-by-country reporting by major corporations. This allows companies to book profits in countries with the lowest tax rates. Giegold said corporations should pay the taxes in the states where they make the profits.

To date, plans to bring in EU-wide tax rates have faltered and individual states are able to compete with differing rates to attract financial corporations, especially US internet concerns.

Read more: Austria to implement digital tax for tech giants 

Banque de Luxembourg is one of about 140 banks operating in the small European country surrounded by Belgium, France and Germany.

Banque de Luxembourg is one of about 140 banks operating in the small European country surrounded by Belgium, France and Germany.

Social responsibility

Speaking ahead of the World Economic Forum in Davos, the leader of the Greens in the German parliament, Anton Hofreiter, called on corporations to "take more responsibility for solving social and environmental problems."

"Those who think only of the short-term maximization of profit in times of rising populism and burning ecological crises are sawing off the branch on which they are sitting," Hofreiter told AFP. 

Read more: Germans happiest to pay taxes to fund infrastructure

"Constant new reports of multi-million tax tricks, huge wage differentials or lobbying to avoid environmental protections are poison for social cohesion," Hofreiter said. 

He called on the global political and business elite gathered in Davos to direct a "stronger democratization" of the economy. He called the blocks on forming works councils in some companies "an absurdity."

Hofreiter also called on companies to include the views of people and non-governmental organizations before taking corporate decisions.

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