Escaping the exchange of information: Tax evasion via citizenship-by-investment

Dominika Langenmayr and Lennard Zyska

Journal of Public Economics, 2023, vol. 221, issue C

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 is citizenship-by-investment, which offers 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)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Working Paper: Escaping the Exchange of Information: Tax Evasion via Citizenship-by-Investment (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:221:y:2023:i:c:s0047272723000476

DOI: 10.1016/j.jpubeco.2023.104865

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