EUR 15 billion in government revenue lost each year across the EU due to counterfeiting

The economic and social damage caused by counterfeiting deprives governments of revenue and can support serious crime like drug trafficking and money laundering, according to a new report released today by the European Union Intellectual Property Office (EUIPO).

The report estimates that governments across the EU lose up to EUR 15 billion per year in total due to the presence of counterfeit goods in the marketplace, through reduced direct and indirect taxes, as well as social contributions, which are not paid by illegal manufacturers.

In addition, up to EUR 19 billion of sales are lost every year in the EU by the cosmetics and personal care sector, the wine and spirits sector, the pharmaceutical sector and the toys and games sector due to counterfeiting, according to the EUIPO’s estimation. Counterfeits do not undergo the same stringent testing as genuine goods to make sure they are safe for people to consume or use.

Lost sales in the cosmetics and personal care sector, in particular, have increased by over EUR 2.5 billion since the last such analysis was published by the EUIPO in 2019; the highest increase across the sectors studied. Approximately 14.1% of the cosmetic and personal care sector’s sales (EUR 9.6 billion) is lost annually across the EU due to the presence of counterfeit products. In Ireland, that figure stands at 18.5%.

Analysis by the EUIPO shows that recorded dangerous counterfeit goods were assessed as posing a serious risk to consumers. Most of the goods in question were destined for children and were either toys, childcare items or children’s clothing.

Research carried out by the EUIPO and Europol also reveals the links between counterfeiting and other serious crimes. Since 2016, enforcers across the EU have carried out 29 major anti-counterfeiting and piracy operations, targeting organised gangs which were also involved in other serious crimes, including drug trafficking and money laundering.

The Executive Director of the EUIPO, Christian Archambeau, said:

“Counterfeiting is not a victimless crime. Fake products take sales away from legitimate businesses and deprive governments of much-needed revenue. They carry clear health and safety risks for those who use them. But as our joint work with Europol shows, the proceeds from counterfeiting can also support serious organised crime. To fully tackle this, concerted international action is needed at all levels.”

Today’s estimates are contained in the 2020 Status Report on IPR Infringement, which brings together the EUIPO’s reporting work on intellectual property at EU and at global level, including the findings of investigations carried out with the Organisation for Economic Cooperation and Development (OECD) and the European Patent Office (EPO).

The Status Report also contains research on the volume of counterfeit and pirated goods in international trade and the economic contribution of intellectual property-rights intensive industries to economic growth and jobs. The report includes new insights on how small and medium enterprises (SMEs) use intellectual property.