Finance Ministry Confirms Billions Lost in Corporate Tax Evasion

Companies that use legal loopholes to evade corporate tax in Germany by moving their profits abroad are costing the German government billions of euros in lost taxes annually, according the finance ministry.

A ministry spokesperson has confirmed a report in the newspaper Die Welt, which alleged that corporate tax evasion amounts to 65 billion euros in lost revenue each year. The paper cited an internal finance ministry paper as its source.

Finance ministry experts arrived at their figure after investigating the discrepancy between the overall economic balance sheet and revenues from corporate tax.

Solution in corporate tax reform?

Within the framework of Germany's planned corporate tax reform, the ruling coalition hopes to hinder the practice of tax evasion through foreign channels, and force companies to be taxed at home on their full profit margin.

The proposed solution involves sinking the level of corporate tax and, as a countermeasure, broadening the tax base to include interest, rental and leasing income as well as licensing fees. However, the plan has been fiercely attacked by opponents who argue that companies won't have any net gain in terms of tax relief.