In 2005, EU25 FDI1 (foreign direct
investment) in extra-EU25 countries (outflows) increased by 19%, to 153 billion
compared to 129 bn in 2004, while FDI into the EU25 from the rest of the
world (inflows) increased by 23%, from 57 bn in 2004 to 70 bn in 2005.
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| Eurozone countries in
blue |
These increases were strongly influenced by
EU25 flows with North America. In 2005, the EU25 invested
26 bn in the USA and 9 bn in Canada, compared with 7 bn
and 2 bn respectively in 2004. The USA invested 18 bn in the
EU25 in 2005 and Canada 7 bn, compared with US investment
of 15 bn and Canadian disinvestment of 3 bn in 2004. Excluding North
America, EU25 investment in other extra-EU25 countries fell by 2% in
2005, while investments coming from the rest of the world excluding North
America remained stable.
In 2005, intra-EU252 FDI flows
increased by about 80% from 2004.
These figures3, published by Eurostat,
the Statistical Office of the European Commission, come from first results
for 2005 and revised data for 20044 for FDI.
United Kingdom, France and
Luxembourg main actors in extra-EU25 FDI flows
The United Kingdom, with outflows of 56 bn
euro, and a 37% share of the EU25 total, was the largest investor in extra-EU25
in 2005, followed by France (19 bn or 12%) and Luxembourg (16 bn
or 10%). With regard to extra-EU25 inflows, the United Kingdom, with 17
bn, and a 24% share of the EU25 total, was the main recipient of FDI, ahead of
Luxembourg (14 bn or 20%) and France (13 bn or 19%). The role of
Luxembourg in EU FDI is mainly explained by the importance of its
financial intermediation activity5.
In 2005, the EU25 was a net investor in the
rest of the world, with outflows higher than inflows by 83 bn euro (0.8% of
GDP). In 2004, outflows were higher than inflows by 72 bn (0.7% of GDP). Among
the Member States, the United Kingdom was the highest net investor
outside the EU25 in 2005, with a difference of 39 bn. With inflows higher than
outflows by 1 bn, Poland was the largest net recipient of FDI from
extra-EU25.
Netherlands main investor, United
Kingdom main recipient of intra-EU25 FDI
The Netherlands (87 bn ), France (61
bn) and Luxembourg (49 bn) were the main investors inside the EU25 in
2005. The main recipients of investments from other Member States were the
United Kingdom (115 bn), Luxembourg (43 bn) and the
Netherlands (30 bn), while Ireland recorded disinvestment of 20
bn.
Many US multinationals, have their regional
headquarters in the Netherlands.
Ireland operates as a conduit for US multinationals'
overseas profits to take advantage of a tax exemption on patent income. For
example, Microsoft has an Irish subsidiary Round Island One Ltd., which
controls more than $16 billion in Microsoft assets. It had gross profits of
nearly $9 billion in 2004 and operates from the offices of a Dublin legal
firm.
In 2004, the US Congress
agreed an amnesty to encourage the repatriation of profits form overseas units
of US multinationals. That is one factor for the fall in 2005. However, FDI has
been declining in recent years. FDI inflows
to Ireland fell from 22.5 billion in 2003 to
11.7 billion, in
2004
(See: Microsoft to hide Irish Tax Haven data of subsidiaries that have
saved it billions of dollars in US taxes
Foreign Direct Investment into OECD countries jumps 27% in 2005;
Profit repatriation puts Ireland's FDI in
red
