The European Commission published a study using economic modelling to explore which Member States are exposed to aggressive tax avoidance structures, and how it impacts on their tax base.

The study “Aggressive tax planning indicators: Final Report” uses economic modelling and suggests that countries with successful foreign direct investment policies such as Ireland have a higher than average corporate tax base due to aggressive tax avoidance activities of multinational corporates. The study by its own admission is subject to data constraints.

According to the study “the most important data shortcomings include: a general lack of firm-level information about the entities in non EU countries, especially zero/no tax countries, no possibility to distinguish between intra-firm and external financial flows, no information about hybrid instruments, no reliable information on permanent establishments, incomplete data about intellectual property and patent ownership, no detailed bilateral information about royalty flows and poor quality of bilateral foreign direct investment flows.”