Every working person has to pay taxes. Large companies with billions in turnover, on the other hand, use a variety of methods to avoid paying taxes. As a result, they often pay even less tax than their employees. Companies conceal or shift profits—and our state coffers remain empty. We shed light on the tax tricks used by 14 companies in the EU and what solutions there are to combat them.
How much money is lost in tax swamps?
- 7.6 trillion dollars: This is the total amount of private wealth that the super-rich are stashing away in tax havens around the world, according to French economist Gabriel Zucman. Of this amount…
- $2.6 trillion comes from Europe, $1.3 trillion from Asia, $1.2 trillion from the US, $800 billion from the Gulf countries, $700 billion from Latin America, and $200 billion from Russia.
- 8% of global wealth is parked in tax havens by wealthy individuals, according to Zucman.
- 250 billion dollars: According to the Tax Justice Network, this is the amount of tax revenue lost in the countries where the wealth originates.
- 1,000 billion euros: According to the EU Commission, this is the amount of damage caused to EU member states by tax evasion. That is almost three times the budget deficit of the EU member states.
- 90 to 95% of all offshore transactions are used for tax evasion.
How does corporate tax fraud work?
A classic tax avoidance tactic is the principle of underreporting and shifting profits to low-tax countries and tax havens. How, for example, does a US corporation shift profits generated in Austria (where corporate income tax is 23 percent) to the financial center of Cyprus, where the tax rate is only 12.5 percent? It establishes a subsidiary based in a low-tax country (Cyprus). This subsidiary charges the parent company, which generates the actual added value in Austria, for overpriced services.
These include fees for licenses, trademark or naming rights, technical know-how, or the supply of raw materials. This reduces the profits of the parent company and transfers them to the subsidiary in the low-tax country. The taxable amount is reduced significantly. As a result, Austria loses billions of euros.
Large international corporations do this every day. They avoid paying taxes in the countries where they generate their profits by shifting profits or using letterbox companies in countries with lower taxes. US corporations are the most aggressive in this regard. They shift almost a quarter (24 percent) of their profits to “low-tax countries.” International corporations from other countries shift “only” 17 percent of their profits.
In 2016, these profit shifts amounted to US$219 billion. In 2021, the figure was almost twice as high, at US$416 billion. In these six years, US corporations have shifted a total of half a trillion US dollars and concealed it from the treasury. It should be noted that employees do not have the option of shifting their income to a low-wage country for tax purposes.
Large, internationally active tax consulting and auditing firms such as PricewaterhouseCoopers, Ernst & Young, Deloitte, KPMG, and even the world’s largest asset manager, BlackRock, openly advertise “measures to optimize tax payments for major clients” on their websites. In reality, this is “aggressive but legally permissible tax management,” says economist Ceyhun Elgin. Richard Murphy, professor of international political economy at City University of London, puts it even more bluntly. He sees this aid to tax avoidance as a threat to democracy:
If you want to know the common thread that enables tax abuse and tax havens and helps companies that dominate the globalized world to evade their tax obligations, it is the Big Four (PwC, KPMG, Deloitte, and Ernst & Young). The result of their actions is that they support tax abuse. The consequences of this are now obvious, as one country after another is faced with deficits. The costs incurred as a result are borne by the poorest in society. And yes—accountants are also to blame. All of this jeopardizes democracy.
These 14 companies pay hardly any taxes
The fairy-tale tax world of Disney
The US media company Disney shifted billions in profits through subsidiaries in Luxembourg. As a result, the group paid less than one percent in taxes. This was made possible by an internal bank in Luxembourg, which granted internal loans and thus reduced profits on paper.
In 2017, French tax investigators searched Disney’s headquarters in Paris. They suspected that profits were being systematically transferred out of France. Although it was not clear how much money was involved, 90 percent of Disney’s profits in France are believed to have been transferred to the UK first. No official additional tax claims in the billions have been made so far, but with the EU minimum tax rate of 15 percent coming into effect in 2024, such arrangements are coming under increasing pressure. Since then, it has become more difficult for corporations in the EU to shift or conceal profits.
Fun fact: Not only profits should be taxed fairly, but also private wealth. This is what Disney heirs Abigail and her brother Tim Disney, who no longer have a say in the company but work as a documentary filmmaker and film director, are calling for. Together with 200 other super-rich signatories, they wrote a letter in 2023 to the “global elite” who meet annually at the World Economic Forum in Davos (Switzerland).
“End the era of extreme wealth. Tax the super-rich,” says the letter, which is directed against the extreme global inequality between the super-rich and “normal people.”
McDonald’s pays less tax than its own employees
Every employee pays more tax than McDonald’s itself. Similar to Disney, the same thing happened at the popular burger chain. French authorities accused the fast food company of shifting profits from over 1,500 restaurants to Luxembourg – around 75 million euros per year. In 2016, investigators searched the Paris headquarters, and in 2022, McDonald’s agreed to a record payment of €1.25 billion with the public prosecutor’s office. The alternative would have been costly criminal proceedings against McDonald’s, which is alleged to have used questionable tax tricks between 2009 and 2020.
Google pays only 2.4 percent tax on $34 billion in profits
Google, or more precisely its parent company Alphabet, used the controversial “Double Irish with a Dutch Sandwich” strategy for years to park profits outside the US virtually tax-free. This DID principle means that two Irish companies are combined with a Dutch company in between. Or to describe Google’s approach in four words: “We’re setting up a shell company!” Thanks to its shell company, Google only had to pay a tax rate of 2.4 percent – which is peanuts considering its revenue of $90 billion and profits of $34 billion. This tax avoidance strategy used by multinational corporations is not only controversial, but also robs society of important revenue.
However, things have changed in the meantime: since 2015, all registered companies, including multinationals, must have their tax domicile in Ireland. In 2020, the controversial “sandwich” tax loophole was finally closed.
Prior to these developments, Google Ireland Holdings Unlimited Company had its tax residence in Bermuda. Now it is located in Ireland, where Google—like all other companies—has to pay a tax rate of 12.5 percent. Compared to other countries in Europe, this is still very, very low.
Lengthy tax proceedings and back payments are not uncommon for Google in Europe. In France, for example, Google reached a settlement in 2019: the company paid €965 million (€465 million in additional taxes + €500 million in penalties) to end years of tax proceedings. In Italy, Google agreed to pay €326 million in 2025 to settle a tax dispute for the years 2015-2019. In Austria, such models cost the state around €200 million in profit taxes in the digital sector every year.
Always trouble with Amazon: €44 billion in sales and hardly any taxes
Online giant Amazon has also been using Luxembourg as a tax haven for years: in 2020, Amazon generated €44 billion in sales across Europe. However, the group reported a loss of €1.2 billion for its Luxembourg-based company. As a result, Amazon did not have to pay any corporate income tax during the coronavirus pandemic.
According to the EU Commission, Amazon shifted profits between 2006 and 2014 through a licensing system to a non-taxable holding company in Luxembourg. Namely, from the actually taxable company “Amazon EU” to the non-taxable holding company “Amazon Europe Holding Technologies.” Different name, different tax rules – it can be that simple.
Because the EU Commission regularly reviews the tax practices of its member states, it demanded €250 million in back payments from Amazon. However, Amazon filed a lawsuit and won: on December 14, 2023, the European Court of Justice confirmed that the Commission could not prove any unlawful advantage.
Current proceedings are underway in Italy: The public prosecutor’s office is investigating Amazon and three executives for alleged tax evasion amounting to €1.2 billion for the years 2019 to 2021. In July 2024, Italian investigators froze €121 million from an Amazon unit on suspicion of tax fraud and illegal employment. In addition, a second investigation has been underway in Milan since 2024 for alleged tax offenses.
Furniture group Ikea – “Live tax-free” and shift €1 billion in profits
The furniture manufacturer, with 172,000 employees and almost 400 stores in 40 countries, is a prime example of sophisticated, tax-avoiding corporate structures: IKEA stores pay around 3 percent of their sales as a franchise fee to Inter IKEA in the Netherlands.
A franchise company is characterized by the fact that the individual IKEA stores in different countries are responsible for their own businesses as franchise partners, but Inter IKEA manages the trademark rights and know-how for them.
According to a report by the European Greens, IKEA saved around €1 billion in taxes in Europe between 2010 and 2014 through these internal licensing and billing systems. In addition, the Swedish furniture manufacturer shifted profits not only to Luxembourg, but also to the Netherlands and Liechtenstein.
In 2017, the EU Commission initiated state aid proceedings against the tax treatment of Inter IKEA by Dutch authorities. The Netherlands is accused of granting IKEA tax advantages, which are prohibited within EU member states. The investigation is still ongoing. At the same time, IKEA has pledged to comply with a minimum tax rate of 15 percent in all countries from the 2025 financial year onwards.
Apple evaded €13 billion in taxes
Apple was responsible for the biggest tax case in Europe to date: between 2004 and 2014, Apple posted European profits in Ireland via two Irish subsidiaries (Apple Sales International and Apple Operations Europe), which were not formally resident in any country for tax purposes, and taxed them there at rates that were effectively negligible – in some cases as low as 0.005 percent.
According to a report by the European Commission, Apple evaded €13 billion in taxes. “Ireland granted Apple illegal subsidies,” the Commission said, ordering additional payments in the same amount. Apple and Ireland appealed, resulting in a general court overturning the decision in 2020! But that’s not the end of the story:
On September 10, 2024, the European Court of Justice confirmed the EU Commission’s view: Ireland’s tax agreement with Apple was illegal special treatment. What’s interesting is that the EU’s highest court did not consider the low taxes themselves to be illegal, but rather the competitive advantage they gave Apple. The fact that Ireland granted Apple low taxes but not other companies was contrary to EU competition law. Apple must now not only pay the 13 billion in back taxes, but also the interest that has accrued on the amount in the meantime.
Inditex, the parent company of fashion giants Zara, Bershka, and Massimo Dutti, evaded 585 million euros in taxes
Zara, Bershka, Pull&Bear, and Massimo Dutti—these brands are well known among shopping enthusiasts. What they have in common is that they belong to the parent company Inditex. Inditex knows exactly how aggressive tax avoidance works in favor of its subsidiaries. Between 2011 and 2014, the group evaded around 585 million euros in taxes by shifting profits to the Netherlands, Ireland, and Switzerland.
Several countries in Europe suffered as a result: Spain lost €218 million in tax revenue, France lost €76 million, Italy lost €57 million, Germany lost €25 million, and Austria lost around €6 million. Even if the latter figure may seem insignificant compared to the other countries, €6 million could finance healthy snacks for all 1.1 million schoolchildren in Austria. Back to Inditex – the company denies any illegal practices and points out that it complies with all tax laws.
Between 2002 and 2012, Starbucks never paid income taxes in Germany
The coffee company paid virtually no taxes in Europe for many years. According to a report in the Handelsblatt newspaper, the company never paid income tax in Germany between 2002 and 2012 or in France between 2004 and 2012. This is made possible once again by the favorite method of tax-avoiding companies:
A Dutch subsidiary called SMBV charges high license fees (for example, for a special bean roasting technology or for the brand name) to other group units. As a result, there is hardly any profit left in the Netherlands.
Similar to the Apple case, the EU Commission saw unfair competitive advantages here as well. This was because the Starbucks company in the Netherlands had entered into a license agreement (a so-called APA = Advance Pricing Arrangement) with the Dutch tax authorities. This was deemed problematic in terms of competition, and in 2015 the EU Commission accused the Netherlands of granting an illegal tax advantage of around €30 million. Unlike in the Apple case, however, the European Court of Justice overturned this decision in 2019 because the Commission was unable to prove that there was a clear advantage.
What Google can do, Facebook/Meta has been doing for a long time
For years, Meta used the “Double Irish with a Dutch Sandwich” to funnel profits through Ireland and license payments to offshore territories. In 2014, Facebook paid only £4,327 in corporate tax to the UK. After the DID model was abolished in 2020, Meta announced that it would close its Irish companies—but Meta Platforms Ireland continues to handle the majority of international advertising revenue. In the UK, TaxWatch UK estimates that Meta avoided around £330 million in tax payments in 2021 through profit shifting.
Other European countries are also no longer willing to tolerate the practices of Meta and other corporations: In Italy, the tax authorities are demanding €887.6 million in retroactive sales tax for the years since 2015. Italy’s main argument is that user registrations provide data and therefore constitute a taxable service. Meta sees things very differently. In a response to the demands, the company states:
“We strongly disagree with the idea that providing access to online platforms to users should be charged with VAT,” said a Meta spokesperson. “We strongly reject the idea that user registrations on online platforms should be subject to taxation.”
XXXLutz transferred its trademark rights to a Maltese subsidiary to avoid taxes
In 2007, the furniture group based in Wels set up a tax-saving model with a subsidiary in Malta. XXXLutz transferred its trademark rights to the Maltese subsidiary, meaning that the Austrian branches had to pay high license fees to Malta, which significantly reduced the group’s profits in Austria. 50 million euros that XXXLutz earned in Austria flowed to Malta every year. There, however, the group only has to pay around 5 percent tax. This is significantly less than in the furniture group’s home country, Austria. In 2020, the Administrative Court ruled that those license payments in 2008/2009 could not be recognized as operating expenses because the trademark rights had remained in Austria for economic purposes. During this period, Hans Jörg Schelling was CEO and later a member of the supervisory board of XXXLutz. In 2014, the ÖVP politician became Austria’s finance minister. But it gets even more curious: in 2017, he himself criticized “dubious tax practices in Malta” in an interview.
Raiffeisen—paid no taxes whatsoever on profits of €739 million
Those who are particularly talented not only pay no taxes, but even receive a credit from the state. This was achieved by Raiffeisenlandesbank Niederösterreich-Wien, which managed not only to pay no tax on profits of €739 million between 2006 and 2008, but also to receive a credit of €21.6 million from the state.
All Austrian Raiffeisen regional banks together earned profits of €1.9 billion during this period and paid taxes of around €19 million. This results in a tax rate of exactly 1%. However, the official tax rate for Austrian banks is 25 percent – the Raiffeisen regional banks alone should have paid €475 million to the state.
Less long ago, there was the transfer of an ÖVP membership fee disguised as a large donation. In 2023, the Austrian Raiffeisen Association transferred an unusually high sum of 100,000 euros to the ÖVP.
35 billion bypassing the state: Deutsche Bank and its stock dealers
Close ties between the financial sector and politics provided fertile ground for the biggest tax theft in German history. In 2018, the investigative journalism platform Correctiv uncovered the CumEx and CumCum scandal. But what had happened?
Between 2001 and 2016, bankers, lawyers, and investors defrauded the German state of billions of euros using tax tricks and stock transactions. Instead of going to the state treasury, at least 35 billion euros ended up in the hands of money-hungry stock dealers.
The five European countries most affected (Germany, France, the Netherlands, Spain, and Italy) lost a combined total of around 63 billion US dollars. Legal proceedings remain extremely difficult to this day. In spring 2024, lead investigator Anne Brorhilker unexpectedly announced her resignation. One reason, she said, was the unwillingness of German politicians to adequately prosecute financial crime and support the investigation. To reiterate the scale of the scandal: around 1,700 defendants are being investigated in approximately 120 cases! But how did the CumEx and CumCum transactions actually work? The banks used a tax trick:
Shortly before the dividend is paid out, foreign shareholders lend their German shares to domestic banks, which – unlike foreign investors – can claim the capital gains tax and have it refunded by the state. The shares are then returned and the tax savings are shared. In 2022, Deutsche Bank agreed with authorities and other banks to pay €60 million to settle a CumEx case.
Deutsche Bank / Commerzbank
German banks actively help foreign investors to avoid taxes, causing losses of around €5 billion since 2011. The banks used a tax trick to do this: shortly before the dividend is paid out, foreign shareholders lend their German shares to domestic banks, which – unlike foreign investors – can claim credit for capital gains tax. The shares are then returned and the tax savings are shared.
Fiat must repay €183 million
Fiat, the car manufacturer based in Turin (Italy), is now part of Stellantis – one of the world’s largest car manufacturers. The group used a sophisticated tax structure: between 2012 and 2014, Luxembourg approved intra-group transfer prices via a tax ruling, which allowed Fiat Chrysler Finance Europe to record profits almost tax-free.
On November 8, 2022, the ECJ ruled that the procedure in question did not constitute unlawful state aid. In 2015, the European Commission had already demanded an additional payment of €20–30 million. However, the ECJ overturned the decision because the Commission had applied the reference framework too heavily based on OECD criteria rather than Luxembourg’s national tax law.
The group got off lightly, but it was not quite so easy for Fiat heir and Stellantis CEO John Elkann. The chairman of Stellantis, Ferrari and head of the billion-dollar Agnelli family holding company Exor has become embroiled in a dispute with the Italian public prosecutor’s office over his inheritance taxes. What happened?
Marella Agnelli, who died in 2019, was the wife of Fiat boss Gianni Agnelli and Elkmann’s grandmother, and had been a resident of Switzerland for many years. However, the Italian authorities classify this as a “fictitious residence.” Like the tax-evading corporations, the private family is also said to have moved its residence to save money. That is why the Turin public prosecutor’s office seized €75 million from the Agnelli family’s assets. In an agreement with the family and its head, Elkmann, they agreed on €183 million in back taxes to the tax authorities and Elkmann’s stay in the monastery.
Gucci, Balenciaga, Saint Laurent—luxury brands evaded €897 in taxes
The luxury goods group Kering (which owns brands such as Gucci, Balenciaga, Saint Laurent, and Bottega Veneta) also came under fire because its Italian subsidiary formally recorded a large portion of its revenues through the Swiss entity Luxury Goods International (LGI). On paper, 600 employees in the Swiss canton of Ticino generate a large part of the group’s profits with 30,000 employees. How could this be? It couldn’t, because as with many other corporations, money was moved back and forth. Between 2011 and 2017, such transfer pricing structures are said to have shifted incredible profits from Italy to Switzerland.
Kering reached an agreement with the Italian tax authorities in 2019: 897 million euros in back taxes were determined, plus interest and penalties, for a total of 1.25 billion euros. Like the parent company, so the subsidiaries – or in this case, the sons: Marco Bizzarri, head of the Gucci fashion label, negotiated an annual salary of €8 million (net!) as Gucci CEO. With an alleged residence in Switzerland and two alleged employment contracts (one with Gucci in Italy, one with a shell company in Luxembourg), he then managed to smuggle this monster salary past the tax authorities. He paid a paltry 13 percent income tax. But that came to an end in 2018. He now has to pay back his taxes.
BASF – Evading €1 billion in taxes over four years
Even for chemical giant BASF, tax havens are not located in Bermuda or Fiji, but right in the heart of Europe. The tax theft took place in Belgium, Malta, and the Netherlands and amounted to a total of almost €1 billion in taxes between 2010 and 2014.
How does this work? Until recently, Belgium attracted companies with tax breaks for “excess profits.” Malta offers a generous tax exemption of around 85 percent on dividend income. But at the heart of BASF’s tax evasion model is the Netherlands: there, income from licenses and patents is taxed at a simplified rate of only 5 percent, and dividends – i.e., profit distributions from intra-group shares – are completely tax-exempt. At the same time, the associated income generated through interest is completely tax-exempt in Belgium. Through the Dutch corporate network, profits generated in the EU also flow into low-tax subsidiaries in Puerto Rico and Switzerland.
Incidentally, Marlene Engelhorn is a well-known scion of the BASF empire. She is the granddaughter of BASF founder Friedrich Engelhorn. While many people know that Marlene Engelhorn has redistributed part of her million-dollar inheritance to society, fewer people are aware that BASF helped recruit Nazi forced laborers and exploited concentration camp prisoners after the war began in 1939. IG Farben, part of BASF, had a factory for the production of synthetic rubber Buna, which was intended to make the German arms industry independent of imported natural rubber. A huge labor camp was built for this purpose. This Buna/Monowitz camp was a subcamp of the Auschwitz concentration camp.
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