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Banks in Tax Havens: First Evidence based on Country-by-Country Reporting

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  • Bouvatier, Vincent
  • Capelle-blancard, Gunther
  • Delatte, Anne-Laure

Abstract

Since the Great Financial Crisis, several scandals have exposed a pervasive light on banks' presence in tax havens. Taking advantage of a new database, this paper provides a quantitative assessment of the importance of tax havens in international banking activity. Using comprehensive individual country-by-country reporting from the largest banks in the European Union, we provide several new insights: 1) The average effect of being a tax haven is an extra presence of foreign affiliates by 168%; 2) For EU banks, the main tax havens are located within Europe: Luxembourg, Isle of Man and Guernsey rank at the top; 3) Attractive tax rates are not sufficient to drive extra activity; 4) But lenient regulatory environment attract extra commercial presence; 4) Banks avoid the most opaque countries with weak governance; 5) The tax savings for EU banks is estimated between Euro 1 billion and Euro 3.6 billion.

Suggested Citation

  • Bouvatier, Vincent & Capelle-blancard, Gunther & Delatte, Anne-Laure, 2017. "Banks in Tax Havens: First Evidence based on Country-by-Country Reporting," CEPR Discussion Papers 12222, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12222
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    Keywords

    Tax evasion; International banking; Tax havens; Country-by-country reporting;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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