Will we ever be able to track offshore wealth? Evidence from the offshore real estate market in the UK

Jeanne Bomare () and Ségal Le Guern Herry ()
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Jeanne Bomare: Paris School of Economics
Ségal Le Guern Herry: Sciences Po

No 4, Working Papers from EU Tax Observatory

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.

Keywords: Offshore Real Estate Investment; Common Reporting Standard (CRS); Tax Havens; Automatic Exchange of Information; UK Property Market; Financial Secrecy and Evasion (search for similar items in EconPapers)
JEL-codes: D31 H24 H26 K34 (search for similar items in EconPapers)
Pages: 70 pages
Date: 2022-06
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Persistent link: https://EconPapers.repec.org/RePEc:dbp:wpaper:004

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