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

Vincent Bouvatier, Gunther Capelle and Anne-Laure Delatte

No 55, European Economy - Discussion Papers from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

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) Tax havens attract large extra banking activity beyond the standard factors based on gravity equations; 2) For EU banks, the main tax havens are located within Europe: Luxembourg, Isle of Man and Guernsey rank at the top of the foreign affiliates; 3) Attractive low tax rates are not sufficient to drive extra activity; 4) High quality of governance is not a driver, but banks avoid countries with weakest governance; 5) Banks also avoid the most opaque countries; 6) The tax savings for EU banks is estimated between EUR 1 billion and EUR 3.6 billion.

JEL-codes: F3 G21 G3 H22 H3 L8 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2017-07
New Economics Papers: this item is included in nep-ban, nep-pbe and nep-pub
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:euf:dispap:055

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