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Dirty money coming home: Capital flows into and out of tax havens

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  • Miethe, Jakob
  • Menkhoff, Lukas

Abstract

We use recently released bilateral locational banking statistics of the BIS to show the full circle of international tax evasion via tax havens. White-washed money from tax havens is withdrawn from banks in non-havens if an information treaty is signed. This complements the stylized fact of such a reaction on outbound flows into tax havens. We find different time lags and other plausible structures in these reactions and a puzzling decline of the effect of treaties on capital flows over time.

Suggested Citation

  • Miethe, Jakob & Menkhoff, Lukas, 2017. "Dirty money coming home: Capital flows into and out of tax havens," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168082, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc17:168082
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    2. Fauser, Hannes & Godar, Sarah, 2021. "Income tax noncompliance in Germany, 2001-2014," Discussion Papers 2021/17, Free University Berlin, School of Business & Economics.
    3. Fuest, Clemens & Hugger, Felix & Neumeier, Florian, 2022. "Corporate profit shifting and the role of tax havens: Evidence from German country-by-country reporting data," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 454-477.
    4. Arun Advani & Hannah Tarrant, 2021. "Behavioural responses to a wealth tax," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 509-537, September.
    5. Reindl, Ilona & Tyran, Jean-Robert, 2021. "Equal opportunities for all? How income redistribution promotes support for economic inclusion," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 390-407.
    6. Andersen,Jorgen Juel & Johannesen,Niels & Rijkers,Bob, 2020. "Elite Capture of Foreign Aid : Evidence from Offshore Bank Accounts," Policy Research Working Paper Series 9150, The World Bank.
    7. Niels Johannesen & Patrick Langetieg & Daniel Reck & Max Risch & Joel Slemrod, 2020. "Taxing Hidden Wealth: The Consequences of US Enforcement Initiatives on Evasive Foreign Accounts," American Economic Journal: Economic Policy, American Economic Association, vol. 12(3), pages 312-346, August.
    8. Pierce O’Reilly & Kevin Parra Ramírez & Michael A. Stemmer, 2021. "Exchange of Information and Bank Deposits in International Financial Centres," Hacienda Pública Española / Review of Public Economics, IEF, vol. 239(4), pages 27-69, November.
    9. Agustín Bénétrix & Lorenz Emter & Martin Schmitz, 2021. "Automatic for the (tax) people: information sharing and cross-border investment in tax havens," Trinity Economics Papers tep1321, Trinity College Dublin, Department of Economics.
    10. Maria Delgado Coelho & Sebastian Beer & Sebastien Leduc, 2019. "Hidden Treasure: The Impact of Automatic Exchange of Information on Cross-Border Tax Evasion," IMF Working Papers 2019/286, International Monetary Fund.
    11. Dominika Langenmayr & Lennard Zyska, 2021. "Avoiding Taxes: Escaping the Exchange of Information: Tax Evasion via Citizenship-by-Investment," Working Papers 204, Bavarian Graduate Program in Economics (BGPE).
    12. Casi, Elisa & Nenadic, Sara & Orlic, Mark Dinko & Spengel, Christoph, 2019. "A call to action: From evolution to revolution on the Common Reporting Standard," ZEW Discussion Papers 18-035, ZEW - Leibniz Centre for European Economic Research.
    13. Dominika Langenmayr & Lennard Zyska, 2021. "Escaping the Exchange of Information: Tax Evasion via Citizenship-by-Investment," CESifo Working Paper Series 8956, CESifo.

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    JEL classification:

    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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