Portugal loses €600 million to offshores

 In News, Tax

Portuguese state coffers have lost nearly €600 million in corporation tax revenues because of multinationals operating in Portugal reporting their profits in both onshore and offshore tax havens.

This amount corresponds to around 9% of total tax revenues. This is according to the findings of an ongoing project called ‘The Missing Profits of Nations” undertaken by the universities of Berkeley, California and Copenhagen which update their data bases annually and is based on exchanges of information between countries and the publication of data about the subsidiaries of overseas companies or FATS.
The researchers at these universities published the latest data in June which referred to 2017 and revealed that in that year there were over 6,700 overseas subsidiaries employing around 456,000 people according to information from the National Statistics Institute (INE).
The data collected for the study, which has now been updated, shows a fall in lost revenues to the State. In 2016 the tax man lost around €630 million, corresponding to 11% of IRC revenues. In 2017 this amount fell to €586 million or 9% of the whole amount netted in IRC.
In total, multinationals operating in Portugal transferred profits of €2.8Bn, below the €2.9Bn recorded the year before. The lion’s share went to other EU countries and just a small amount to countries outside the EU.
The main destination for Portuguese profits were the Netherlands to which were transferred €900 million, which meant that €179 million was lost in taxes, around 3% of total IRC revenues. The country is the number one in the EU when it comes to offering tax breaks at a time when the Dutch Government is flatly against pouring money into the EU Covid-19 slush fund.
The other five onshore EU tax havens are Luxembourg (€146,36 million), Ireland (€121.67 million), Belgium (€63.48 million), Switzerland (€52.90 million) and Malta (€7 million).
As for offshores, €362 million were transferred from Portugal, with the lion’s share going to Switzerland (€284 million) and other tax havens such as the Bermudas, Caribbean, Puerto Rico, Hong Kong and Singapore.
Overall, multinationals transferred €617Bn worldwide to offshores, reducing global tax revenues by 10%.