Let a big company pay less or more taxes It depends not only on the amount of money you earn, but also on how you organize your economic activity around the world. And it is there, between small details, where the contrasts appear. one in three large multinational groups Spaniards pay an effective rate on their profits of less than 15%. Specifically, there are 63 large companies that enjoy lower taxation than usual and that, together, barely contribute 7% of the corporate tax paid globally, despite concentrating a relevant part of the profits. Meanwhile, the rest of the companies assume the majority of the tax bill.
All the data have been published this Wednesday by the Tax Agency in the Country by country report, with figures corresponding to the year 2023. And they allow us to understand why these divergences occur. This type of company does not operate only in Spain, but has large networks made up of thousands of subsidiaries spread throughout the world. In 2023, the spanish groups included in this statistic reached 171, while their delegations exceeded 16,000, almost half outside the European Union. This international presence allows, through a conglomerate of practices, that the benefits and taxes are distributed among many countries, each with its own tax rules.
The data of the Country by Country Report o CbCfor its acronym in English, reveal that these 171 multinationals earned more than 112,000 million euros in the year and paid about 24,000 million in taxes, which leaves an average effective rate close to 22%, very similar that of the previous yearbut still below 2020 levels. But that average is somewhat misleading, since it hides very notable differences behind it. While some groups are taxed at high rates, others bear a much lighter tax burden.
This is the case of 19 multinationals that earned a total of 12,460 million and paid 864 million in taxes, which leaves an effective rate close to 7%, well below 15%. the agreed minimum within the Organization for Economic Cooperation and Development (OECD), although the agreement has recently been modified due to pressure from the United States. More striking is the situation of 29 multinationals that obtained a total of 18,282 million in profits and paid 307 million in corporate tax, leaving an effective rate of only 1.7%.
At the other extreme, another 52 multinationals that had more than 7,000 branches recorded profits of more than 51,000 million and a quota of 17,500 million in corporate tax, giving way to a much higher effective taxation of 34%.
These reports, prepared within the OECD, arise as a consequence of the action plans against erosion of the tax base and the transfer of profits, with the aim of providing tax agencies with control tools to ensure that profits are taxed wherever the activity is carried out. The declarations, which must be submitted by multinationals with a consolidated net turnover worldwide equivalent to or greater than 750 million euros, provide States with a global perspective of intragroup activity at the jurisdiction level, detailing, among other variables, the level of income, pre-tax profits and the amount of corporate tax accrued and paid in each location.
The report, however, calculates the effective rate differently from other statistics. Instead of using the group’s global profit, it is based on the results of each country, adding profits and losses of the subsidiaries in each jurisdiction. Furthermore, this effective rate does not coincide with the legal rate. In Spain, for example, corporate tax has a nominal rate of 25%, but is applied on a basis reduced by deductions and adjustments. And it is not the same as the calculation of the OECD global minimum tax, which uses a homogeneous base for all countries.
Profitability gap
The differences are also seen when comparing where the activity is generated and where taxes are paid. Spain, for example, accounts for more than half of the turnover of these multinationals (55%), but only around a third of the total tax. In other regions, such as America, the weight of profits and taxes is greater than that of sales. This reflects that the distribution of results within groups does not always coincide with the place where the activity is carried out.
Other variables are added to this photograph that allow us to see the statistics. Thus, in addition to knowing how much multinationals earn or where they pay taxes, you can also know how profitable and productive They are its subsidiaries in each territory. Altogether, the profitability of these groups – that is, what they earn in relation to their income – is around 8.4%, a figure that has increased compared to the previous year and reflects that profits have grown more strongly than sales.
However, important differences again appear depending on where they operate. The subsidiaries located in Spain present a lower profitability than the average, around 6.3%, which suggests that more costs are concentrated within the groups in the country. On the other hand, subsidiaries in other jurisdictions, both inside and outside the European Union, show higher levels of profitability, in some cases clearly above that global average.
It is a contrast that is also seen when focusing on employment. Spanish subsidiaries are, on average, larger and have more workers, while in other countries the structures are smaller. This has a direct effect on productivity, because although in Spain companies sell more per employee, in some territories such as Luxembourg or Malta, with much smaller workforces, very high levels of profit and productivity per employee are recorded.
