Profit Shifting of Large German Companies to Low-Tax Countries – How High Are the Tax Revenue Losses?

Of the total global profits of the largest German multinationals, 9 percent are accounted for by subsidiaries based in tax havens. According to estimates by the ifo Institute, 62 percent of these profits can be attributed to real economic activity, while 38 percent are the result of profit shifting to avoid taxes. As a result, the German treasury is missing out on annual tax revenue of around EUR 1.6 billion. If the activities of smaller German multinationals and German subsidiaries of foreign multinationals are also included, this results in annual tax revenue losses of EUR 5.7 billion.