Will We Ever Be Able to Track Offshore Wealth? Evidence from the Offshore Real Estate Market in the UK
Jeanne Bomare (jeanne.bomare@psemail.eu) and
Ségal Le Guern Herry (segal.leguernherry@sciencespo.fr)
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Jeanne Bomare: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Ségal Le Guern Herry: ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique
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Abstract:
This paper provides evidence of the growing importance of real estate assets in offshore portfolios. We study the implementation of the first multilateral automatic exchange of information norm, the Common Reporting Standard (CRS), which introduces cross-border reporting requirements for financial assets but not for real estate assets. Exploiting administrative data on property purchases made by foreign companies in the UK, we show that the implementation of the CRS led to a significant increase of real estate investments from companies incorporated in the tax havens that were the most exposed to the policy. We confirm that this increase comes from company owners of countries committing to the new standard by identifying the residence country of a sub-sample of buyers using the Panama Papers and other leaked datasets. We estimate that between £16 and £19 billion have been invested in the UK real estate market between 2013 and 2016 in reaction to the CRS, suggesting that at the global scale between 24% and 27% of the money that fled tax havens following this policy were ultimately invested in properties.
Date: 2022-06-05
New Economics Papers: this item is included in nep-eur, nep-ifn, nep-iue and nep-ure
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