Abstract
The COVID-19 pandemic affected most companies’ profits negatively, but some companies did exceptionally well, recording excess profits during the pandemic. In this paper, we estimate the scale of the excess profits and the tax revenue potential of an excess profits tax, an additional tax levied by governments on companies’ excess profits. To estimate excess profits, we develop a trend-adjusted average earnings methodology. We apply the methodology to firm-level consolidated Orbis data to estimate that large multinational corporations with subsidiaries in the EU generated excess profits of $447 billion in 2020 (42% of their total profits in 2020). Using country-by-country reporting data, we estimate the excess profits arising from each EU member state and find that EU member states could together raise $6 billion with an excess profits tax of 10%.
| Original language | English |
|---|---|
| Pages (from-to) | 1001–1036 |
| Number of pages | 36 |
| Journal | Empirica |
| Volume | 51 |
| Issue number | 4 |
| Early online date | 3 Oct 2024 |
| DOIs | |
| Publication status | Published - 2024 |
Bibliographical note
Publisher Copyright:© The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2024.
Funding
This study was funded by the Czech Science Foundation (CORPTAX, 21-05547 M) and Grant Agency of Charles University (GAUK, 130122), and was supported by the Cooperatio Program at Charles University (research area Economics) and the European Parliament's Left Group.
| Funders | Funder number |
|---|---|
| Czech Science Foundation | 21-05547 M |
| Grant Agency of Charles University (GAUK) | 130122 |
| Cooperatio Program at Charles University | |
| European Parliament's Left Group |
Keywords
- COVID-19
- European union
- Excess profit
- Excess profits tax
- H25
- L11
- L25
- Multinational corporation