Study: Tax concessions cost EU countries billions

According to a study by the European Tax Observatory, EU countries bring tax benefits to those with higher incomes of 4.5 billion euros annually. The authors of the study presented today describe the tax competition of countries vying for large foreign income earners with tax-exempt regulations as an increasingly present “downward spiral.”

The observatory said certain tax concessions would benefit more than 200,000 Europeans. Since the mid-nineties, the number of such regulations in Europe for foreigners with high incomes has increased from five to 28. The models are becoming “more and more aggressive”.

They burden the stable taxpayers, while the small group benefits the very wealthy. The authors consider tax saving models in Italy, Greece, and Cyprus to be particularly harmful. The pension systems of Cyprus, Greece and Portugal are also particularly “aggressive”.

According to the EU Commission, the Tax Observatory, which is funded by the EU but independent, aims to support policy-making in the EU through research, analysis and exchange. It is based at the Paris School of Economics.