German healthcare giant Fresenius has avoided up to €2.9 billion in taxes worldwide through aggressive tax planning, according to a new report by the Centre for International Corporate Tax Accountability & Research (CICTAR) in cooperation with the European and global public service trade union federations EPSU & PSI and the Tax Justice Network.
The study, reported about today in Süddeutsche Zeitung, also finds that eight billion euros of not finally taxed profits of the group are held in offshore accounts.
Fresenius is represented in almost every well-known tax haven around the world, including the Cayman Islands and the British Virgin Islands, Hong Kong, Delaware, Singapore and Panama.
The company uses this network of tax havens to shift profits and avoid higher corporate taxes in Germany and other countries, according to the report. Intra-group loans are a popular instrument: In 2017, for example, the two Irish Fresenius subsidiaries made a profit of 47 million euros just by granting loans to group companies in Spain and the United States – without any employees.
Rosa Pavanelli, General Secretary of Public Services International (PSI), calls on governments to shut down tax loopholes and change the outdated global tax system so that essential public services, like health care, are adequately funded.
“Fresenius needs to clean up its act,” she said. “I am not surprised that this company is engaged in aggressive tax avoidance given the violation of workers’ rights outside of Germany and the global pattern of corruption. The problem is that they have been getting away with it. Governments must make sure they don’t fund tax dodgers or corrupt companies.”
The study states that Fresenius avoids its tax liability by reporting high profits where corporate taxes are low. In important markets such as Germany and the United States, profits are artificially reduced. Although Fresenius generates its sales primarily in countries with a corporate tax rate of at least 30 percent, the company’s global tax rate in 2018, according the company’s own filings, was only 18.2 percent.
ver.di, the union responsible for health services in Germany, criticizes these practices sharply.
“The community is being denied money that is urgently needed for investment, not least in the health sector. With this tax trickery, Fresenius is jeopardizing its reputation as a reputable health care company” said ver.di federal board member Sylvia Bühler.
Fresenius’s critics demand that the health care company correct its course and set a good example: “A company that is committed to the well-being of people and generates its sales largely through government health care budgets should pay its taxes responsibly and transparently,” says Christoph Trautvetter, a tax expert from the Tax Justice Network.
Along with PSI and IndustriALL, UNI Global Union is coordinating the Fresenius Global Union Alliance. The coalition, launched last May, is committed to making Fresenius a more responsible company and gaining a global agreement that allows its 290,000 workers worldwide to form a union free from intimidation.
“In recent years, Fresenius has been marked by corruption, union busting and tax avoidance,” said UNI General Secretary Christy Hoffman. “It’s run afoul of every important global measure of responsibility. It’s time for the company’s management to move away from low-road, unethical practices and take steps to improve both its conduct and reputation.”