Inside the European centres favoured for cross-border tax planning

Euronews

14-05-2025

Countries are estimated to be losing €416 billion ($492 billion) in tax revenue each year due to profit shifting by multinational corporations and offshore tax arrangements by wealthy individuals, according to the State of Tax Justice 2024 report by the Tax Justice Network.
The UK, along with its Overseas Territories and Crown Dependencies, is cited in the report as the largest contributor to global tax revenue losses, accounting for 26% of the total.
The report finds that Europe and its associated jurisdictions are collectively linked to over 70% of the risk of corporate tax base erosion globally.
So, which European jurisdictions are most frequently used in international tax planning structures? Which countries play a prominent role in enabling such practices? And where do current rules make it easier for corporations to minimise their tax liabilities?
The Corporate Tax Haven Index (CTHI) assesses jurisdictions based on how much they contribute to enabling multinational corporations to shift profits and reduce tax payments, using a system of scores and indicators developed by the Tax Justice Network.
A jurisdiction's CTHI value reflects the extent of its involvement in facilitating global corporate tax base erosion, as calculated by the index. According to the 2024 report, countries are ranked by the scale and aggressiveness of their tax systems in offering corporate tax avoidance opportunities.
The UK's network of Overseas Territories and Crown Dependencies features prominently. The British Virgin Islands, Cayman Islands, and Bermuda occupy the top three positions in the index, each scoring over 2,400 points.
Among European jurisdictions, Switzerland holds the highest score outside the UK network (2,279), while the Netherlands (1,945) ranks highest within the European Union.
Among Europe's top five economies, the UK (894) has the highest CTHI value, closely followed by France (883). Germany scores 590, with Spain at 557. Italy performs the best with a score of 342—since a lower score indicates better performance in limiting corporate tax avoidance.
The CTHI Share is a critical metric that measures the proportion of global corporate tax avoidance risk attributed to each jurisdiction. According to the report, the UK and its network of Overseas Territories and Crown Dependencies are responsible for one-third of global corporate tax avoidance risks, while EU countries account for another third.
Breaking it down further, just three British Overseas Territories account for 19.7% of global corporate tax avoidance risks: the British Virgin Islands (7.1%), the Cayman Islands (6.7%), and Bermuda (5.8%).
In comparison, the UK itself accounts for just 2.1% — still the highest share among Europe's top five economies, followed closely by France, also at 2.1%.
Germany and Spain have similar shares, at 1.4% and 1.3% respectively, while Italy is responsible for just 0.8%.
Switzerland holds a 5.3% share. When other European countries and their associated jurisdictions are included, Europe's total share reaches 72%.
The Haven Score is another key indicator used in the report. It measures the extent to which a jurisdiction's laws and regulations create opportunities for corporate tax avoidance, whether intentional or not.
In 2024, the UK's network of Overseas Territories and Crown Dependencies dominated the rankings, with eight jurisdictions receiving the highest possible score of 100. The UK's score is 59.
Aside from the UK network, Switzerland (89) has the highest Haven Score in Europe, while Ireland and Cyprus (both 79) lead within the EU. Portugal has the lowest score at 46.
In 2021 alone, multinational corporations are estimated to have shifted €1.2 trillion worth of profits into jurisdictions with low or no tax rates, contributing to a €294 billion loss in direct tax revenue for governments globally.
Global Scale Weight is another indicator that measures how much financial activity conducted by multinational corporations enters or exits a given jurisdiction.
Europe and its overseas territories account for 61% of global financial activity, with the UK and its network holding the largest individual share at 16%.
Among individual European countries, the Netherlands has the highest scale weight at 11.1%, followed by Luxembourg at 8.8%. The UK (8.3%), Germany (4.2%), Switzerland and Ireland (both at 3.4%), and France (3.1%) are also among the European countries with the highest scale weights.
When a country offers special tax incentives or preferential tax arrangements to multinational corporations, these companies often end up paying significantly less than the statutory corporate income tax rate on their profits. This can result in much lower lower effective tax rates—known as the Lowest Available Corporate Income Tax Rate (LACIT). This measure is produced by the Tax Justice Network through analysis of potential legal disparities and tax planning strategies.
According to the OECD, the statutory corporate income tax rate is zero in all eight of the UK's Overseas Territories and Crown Dependencies. However, there are significant discrepancies between statutory rates and the documented lowest available corporate income tax rates (LACIT) in several jurisdictions.
The gap between statutory corporate tax rates and LACIT rates highlights the potential for tax planning strategies that can result in much lower effective rates. For example, in Luxembourg, the statutory rate is 24.9%, while the LACIT is just 0.3%.
In Switzerland, the statutory rate is 19.7% vs. 2.6% LACIT, and in Ireland, the gap is 12.5% vs. almost zero. Belgium shows a difference of 25% vs. 3%, while Malta has the largest gap, with a statutory rate of 35% and a LACIT of just 5%.
The Netherlands also demonstrates a sharp contrast, with a statutory rate of 25.8% vs. 5% for the LACIT. In its overseas territories, such as Aruba and Curaçao, statutory rates drop from over 20% to 0%.
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