Tax havens, the 30 largest German companies have 3,800 branches in low-tax countries. Die Linke: “Exclude them from state aid”

Dos Linke’s dossier on Dax 30 companies – The party of the last weeks. Die Linke has put companies belonging to the Dax 30, the segment of the Frankfurt Stock Exchange that contains the 30 larger capitalization stocks: the main German companies. According to the study the 30 companies – since Allianz Deutsche Bank through the victim Lufthansa, Siemens and Volkswagen – have subsidiaries and branches in tax havens, for a total of 3,847 legal entities, according to the classification of the tax haven of Tax Justice Network (TJN) The 30 Dax companies have 527 branches in the Netherlands, 281 in Luxembourg and 187 in Switzerland, to be close. More than half of the total, well 2,075, are instead in Delaware, United States. And abroad they also count 30 locations in Panama and 67 in Cayman Islands. Basf, the world’s largest chemical group, has subsidiaries, for example mainly in the Netherlands and Switzerland, but also in Panama and Bermuda. In 2016 a study commissioned by the group of Verdi – European Free Alliance to the independent investigator Marc Auerbach stressed that the chemical group, through aggressive but legal tax management, made up of Dutch holding companies, Belgian tax benefits, exchange of earnings in low tax jurisdictions like Puerto Rico and Switzerland and a special Malta tax refund schemeHe had achieved Save more than $ 1 billion tax in the period between 2010 and 2014. Asked by Monitor, an in-depth program on Ard television, which with the Süddeutsche Zeitung In recent days, Die Linke’s results were released, the company said that local companies serve local markets and that the group “attaches great importance to compliance with tax laws worldwide.”

But for the EU not all paradises are the same – Also in Germany, in recent weeks there has been debate about the opportunity to allocate generous state aid launched for the pandemic emergency to companies in tax havens. Fabio De Masi, Die Linke MP and promoter of the study, emphasized that of 3,874 paradise-based secondary offices, branches and subsidiaries according to the TJN classification, only 3% (110) is also included among those recognized by the European Union. A circumstance that from a formal point of view makes the debate for the majority of the interested parties without consequences. In short, heaven is not who makes heaven. Of the 30 companies on Dax, 18 have offices in Brussels blacklisted countries, 12 no. These include Continental, IS.in, Deutsche Telekom, Henkel and also BMW, which however has financial companies in Ireland, Luxembourg and Malta. The automaker explained that there are no “artificial” models of tax planning and that especially “in times of crisis it is important to be able to access global liquidity.”

The Fresenius case: the company’s pinwheel from the Cayman Islands to Panama to reduce the average rate – A few months ago, a detailed analysis of the International Corporate Tax Responsibility and Research Center (Cictar) raised the case Fresenius, one of the largest companies in the world in the field of medical services, with a turnover of more than 35 billion euros and almost 300,000 employees in numerous subsidiaries around the world. It is also present among the 30 Dax companies. Cictar has revealed the complex architecture used by the multinational to reduce taxable income in countries with higher taxes and increase it in those with lower rates. Fresenius revenues are generated mainly in countries with a rate above 30%, but in 2018 it managed build an overall average rate of 18.2 percent. In India, where the rate is 35%, Fresenius Kabi’s Oncology affiliate has reported over the past four years that lost average 5.8 percent. In Australia, where the rate is 30%, reported the subsidiary Fresenius Kabi zero profit over a period of three years. In Germany, where 23% of sales are made and where 32% of its employees are located, Fresenius recorded only 10% of total pre-tax income in 2018. According to these estimates, German employees in the last four years would have recorded one productivity equal to half the group average, with a 50 percent lower sales profitability in Germany. THE intragroup loans They are a tool used by the medical giant to evade taxes. According to the study, Fresenius uses financial companies in Luxembourg, Ireland, the Netherlands and Delaware to distribute loans for 9 billion euros. Two The group’s Irish finance companies, despite having no employees, raised € 47m in profit in 2017 simply by lending money to other subsidiaries in Spain and the United States. But the company is also present in many of the world’s tax havens: British Virgin Islands, Hong Kong, Singapore, Panama. The subsidiaries in Bermuda Islands, to Alligator It’s in malt, in particular, offersor captive insurance servicesthat is, insurance and reinsurance companies created by the parent company to insure its risks. “Another frequently used tool to transfer profits and evade taxes,” says Cictar.

Germany is the EU country that loses the most money due to paradises – According to the April data of the study “The lost profits of the nations“of Gabriel ZucmanThomas Tørsløv and Ludvig WierGermany is the country in the European Union that loses the most resources to the benefit of its companies and tax havens, in Europe and worldwide. Berlin loses almost $ 20 billion in taxes each year, 26% of their corporate tax revenue. There would have to be 65 billion in missing earnings on appeal, of which 53 directed in European tax havens (mainly Luxembourg and the Netherlands) and 12 in non-European countries. However, it is difficult to see Germany as a country hostile to business. Also because the federal nature and its administrative model have meant that fiscal competitiveness has always been considered a weapon to be challenged rather than a factor against which to defend itself. In another analysis carried out by the group of the Greens – Liberal Alliance Europe, published in January last year, it was highlighted that the multinationals in Germany were the ones that enjoyed one of the widest differences between the nominal and the effective rate. In the face of aAverage nominal rate of 29.5%, the companies analyzed had managed to achieve an effective rate of 19.6% on average, 10 percentage points less. the Italian companies, by way of comparison, against a nominal rate of 31% they showed aeffective rate of 30.4%, the highest in the European Union. In Germany this is also possible thanks to the three different plans on which the tax system is based: that federal (Bund) which state (Länder) cast municipal.

Increased internal tax competition between towns and cities. – The reduction of taxes for companies and for the highest income pursued in the last 20 years first with the government Schröder and then with governments Merkel (including the reduction of corporate income tax from 45% to 15%) has increasingly reduced the possibilities of the Länder and municipalities. Achim Truger, a professor and among advisers to Parliament and the government since last year, in 2011 calculated that, after the tax reforms carried out between 1998 and 2011, Germany had about 370 billion euros in revenue, of which more than 190 due to the Länder and 42 to the municipalities. Exacerbating the already existing tax competition between the 16 states and the individual realities of the city: a history, as you can see, ultrasecular. Norderfriedrichskoog, a town with less than 50 inhabitants near the border with the DenmarkFor years it has been a famous tax haven within Germany itself, offering hundreds of companies, including subsidiaries of German Bank, Eli Lilly Unilever, Lufthansa, Eon – a municipal tax of zero percent. Until, in 2004, a minimum 7 percent municipal tax was introduced at the federal level.

However, territorial competition has never stopped. In 2008, the decision of the Frankfurt Stock Exchange to transfer personnel and operations to the nearby suburb of Eschborn, about 10 km from the city. In the sights of the former number one on the stock exchange, Challenge Francioni, There was a desire to reduce the tax rate paid by the group to below 30%, from 31% to 33% previously paid. With around 20,000 inhabitants, Eschborn now housing 30,000 workers and seeing the presence of Deutsche Bank subsidiaries, SiemensDeutsche Telekom, Ernst & YoungContinental e Vodafone. Grunwaldsuburb of MunichOn the other hand, it has a tax on commerce and industry equal to half of the adjacent metropolis, to which, with 11,000 inhabitants and 7,000 companies, it subtracts resources every year, generating income of several hundred million. Shoot the spiral of the competitiveness In fact, the tax is not a zero-sum game, but it only has one winner: business. In North Rhine-Westphalia, the most populated land, the city of Monheim since 2012 it has reduced its business tax multiplier almost every year, attracting divisions from large companies such as Bayer and Basf, to the detriment of the nearest cities. Up to 30 of them signed a joint statement last July to protest against the tax dumping from your neighbors the mayor of DüsseldorfThomas Geisel said on the occasion: “I strongly oppose the cannibalization municipal tax. We cannot allow tax dumping make us all losers. Cities need this income for the good of the citizens. “

An initiative that, however, remained a dead letter: in December, the city of Leverkusen, 15 kilometers from Monheim, approved l’Reduction of your business tax, taking it to the same level as its neighbor. With this measure the city waited on paper 135 million euros more, focusing on the influx of new activities from other territories and contextually renouncing state funding for the Stärkungspakt (“Reinforcement pact”) to encourage municipal finances. But thanks to the unexpected recession overall, the board’s decision may have turned out to be genuine boomerang for municipal coffers, which are already constantly lost and subject to the control of the district government. “Courage is at the beginning of the action, happiness is at the end,” he said, citing Democritus, the CDU leader in the town hall at the presentation of the project. But then he added, from the book of Proverbs: “Before the fall there is arrogance“Leverkusen citizens hope this is not the case.