Counterfeit products cost EU governments billions each year

EU member states collectively lose a colossal €15bn each year due to counterfeit goods on the market, says an EU Intellectual Property Office (EUIPO) report.

The losses from stem from uncollected direct and indirect taxes and unpaid social contributions by illegal manufacturers of counterfeit goods.

In the report, EUIPO also estimates that among industrial categories in which fakes pose the greatest risk to health and safety – cosmetics and personal care, wine and spirits, pharmaceutical and toys and games sectors – counterfeiting causes companies to lose up to €19bn in sales each year in the EU.

In particular, sales losses in the cosmetics and personal care sector have increased by more than €2.5bn since the EUIPO’s 2019 report on this issue, which was the largest increase among all the categories studied.

All told, around 14.1 per cent of sales of cosmetics and personal care (€9.6bn) are lost each year in the EU due to the presence of counterfeit products, it says.

The latest version of the report notes that the total volume of counterfeits in trade could be as much as 6.8 per cent of total EU imports, equivalent to €121bn, with China the main producer followed by India and Turkey. The main transit routes into the EU are Hong Kong, Panama, Singapore and the United Arab Emirates (UAE).

European consumers are exposed to a range of hazards from counterfeit goods, ranging from exposure to harmful chemicals to choking, electric shock and a range of injuries. Among dangerous counterfeit products identified and intercepted at the EU’s external borders, 97 per cent were identified as posing a serious risk to consumers, according to the EUIPO analysis.

Many of the products involved were intended for children, such as toys, childcare articles or children’s clothing.

“Counterfeit products deprive legitimate businesses of part of their sales and public authorities of indispensable revenue,” commented EUIPO executive director Christian Archambeau.

“The proceeds of counterfeiting can also finance serious forms of organised crime. To tackle this, concerted international action is needed at all levels,” he said.

A separate EUIPO report suggests that counterfeit goods increasingly being linked to the actions of organised criminal networks and other illegal activities such as drug trafficking, manslaughter, illegal arms possession, forced labour, food fraud, excise duty fraud, VAT fraud, corruption and money laundering.