Europe Faces €416 Billion Annual Tax Losses from Corporate Profit Shifting

In 2024, personal average tax rates in Europe, combining income tax and social security contributions, varied widely, with Belgium having the highest rate at 39.7%, meaning workers paid nearly two out of every five euros in taxes. Seven EU countries, including Belgium, Lithuania, Germany, Romania, Denmark, Slovenia, and Hungary, had tax rates exceeding one-third of gross earnings, while 12 EU countries saw rates over 30%. Separately, the Tax Justice Network's 2024 report highlights annual global tax revenue losses of €416 billion due to profit shifting by multinational corporations and offshore tax arrangements, with the UK and its Overseas Territories accounting for 26% of these losses. The British Virgin Islands, Cayman Islands, and Bermuda rank highest in enabling corporate tax avoidance, followed by Switzerland and the Netherlands within Europe. Additionally, ongoing international tax reform efforts include the OECD's two-pillar project, with recent guidance updates addressing multinational enterprise tax returns and deferred tax assets, while the U.S. continues to negotiate its role in the framework. These developments underscore the complexity and significance of personal and corporate tax policies in Europe and globally.