Multinational tax engineering deprives Spain of €30 billion

BarcelonaFinancial engineering, which benefits large corporations, has devastating effects on national treasuries. The Spanish treasury lost over $32 billion in corporate tax revenue between 2016 and 2021 (€27.7 billion at the current exchange rate) due to legal tax techniques employed by multinationals worldwide. Of this sum, approximately 10% corresponded to practices aimed at reducing the tax burden, such as shifting profits to lower-tax jurisdictions, by large US companies like Amazon and others.

These figures are included in the Tax Justice Network's latest report, which warns that "the United States, under the presidency of Donald Trump, poses a clear threat to the fiscal sovereignty of countries, including its own." The analysis covers the first term of the US leader, from 2017 to 2021. During the period studied, from 2016 to 2021, US multinationals were responsible for a global loss of corporate tax revenue of $465 billion. In fact, the US lost $271 billion from domestic multinationals, roughly half of the total revenue shortfall from large companies in the country, according to the report. The total global loss of tax revenue was $1.7 trillion during this period.

In Europe, according to this independent organization of researchers and activists who study the effects of tax evasion and avoidance, Spain was among the hardest hit, with over €3 billion in lost revenue due to the practices of US multinationals, out of a total of over €30 billion. However, other European countries surpass it: Luxembourg, with over €22 billion out of a total of €50.763 billion; Germany, with €16.512 billion out of €109.873 billion; France (the most affected country in the EU), with €14.024 billion out of a total of €116.813 billion; and the United Kingdom – which left the EU in 2020 – with €9.010 billion out of a total of €53.503 billion, among others. In any case, the Spanish tax authorities were the fourth in Europe to experience the greatest erosion of corporate tax revenue within Europe, surpassed only by France, Germany, and Belgium (76.921 billion euros, none of which came from US multinationals).

Global negotiations

Countries are in negotiations for a global framework for tax cooperation. The goal, for the first time, is to have an inclusive and effective global framework. One of the advances is the global minimum tax, which represents one of the most significant changes in international taxation in recent decades. Its objective is to ensure that large multinational corporations pay at least 15% in taxes on profits, regardless of where they are based or where they generate their revenue. Domestically, the US, under Trump, who managed to pass a massive tax cut, has reduced the capacity of its tax authorities, despite being "a country that suffers some of the greatest revenue losses due to cross-border tax abuse," according to the report. At the same time, Trump has also threatened most countries with tariffs to defend his own fiscal sovereignty and has requested an effective exemption for his multinational corporations from the proposals that the US pushed for the OECD, which groups the world's most industrialized countries.

In 2025, the OECD's failure is even more damaging. While the OECD's "two-pillar" proposals are in ruins and unlikely to ever be implemented in any substantial way, the world's countries are negotiating a United Nations Framework Convention on International Tax Cooperation ("United Nations tax convention"). Advances in global tax regulation come "at a time when equitable global taxation is simultaneously threatened in an unprecedented way by the unilateral action of the new US administration," the authors warn.

After the US, the countries most affected by tax avoidance schemes employed exclusively by US multinationals are India, with $34.803 billion, followed by Australia ($18.310 billion) and Mexico ($17.530 billion). By continent, in Africa, the country that lost the most revenue during this period due to US multinational tax avoidance schemes was South Africa, with $36.660 billion, of which more than $6 billion came from US companies. In Asia, it was India, with $88.370 billion, of which more than $34 billion came from US companies. In the Caribbean, the Cayman Islands, a tax haven, lost $46.436 billion, but Bermuda accounted for more than $21 billion of the total loss by US companies, out of a total of approximately $24 billion. In Latin America, Mexico had the largest share of US multinationals, with 17,552 million invested out of a total of $45.38 billion; however, the hardest-hit country was Venezuela, with over $50 billion invested, of which approximately $6.5 billion came from US companies. In Oceania, Australia had the largest share, with $47.662 billion invested, of which over $61 billion came from US multinationals.