Avoiding Taxes: Escaping the Exchange of Information: Tax Evasion via Citizenship-by-Investment

Dominika Langenmayr and Lennard Zyska

No 204, Working Papers from Bavarian Graduate Program in Economics (BGPE)

Abstract: With (automatic) exchange of tax information among countries now common, tax evaders have had to find new ways to hide their offshore holdings. One such way are citizenship-by-investment programs, which offer foreigners a new passport for a local investment or a fixed fee. We show analytically that high-income individuals acquire a new citizenship to lower the probability that their tax evasion is detected through information exchange. Using data on cross-border bank deposits, we find that deposits in tax havens increase after a country starts offering a citizenship-by-investment program, providing indirect evidence that tax evaders use these programs.

Keywords: Citizenship-by-investment programs; tax havens; tax evasion (search for similar items in EconPapers)
JEL-codes: F53 H24 H26 K37 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2021-03
New Economics Papers: this item is included in nep-iue, nep-law and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://bgpe.cms.rrze.uni-erlangen.de/files/2023/0 ... ip-by-Investment.pdf First version, 2021 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:bav:wpaper:204_langenmayrzyska

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