Banks defy gravity in tax havens

Vincent Bouvatier, Gunther Capelle-Blancard and Anne-Laure Delatte

Oxford Economic Papers, 2025, vol. 77, issue 3, 885-904

Abstract: This article examines the international activity of banks. We use a gravity framework and country-by-country reports (CbCR) to predict the turnover of European Union (EU) banks worldwide, including jurisdictions usually considered tax havens. Our results show that: (1) about half of the activity of EU banks in tax havens, which accounts for 17% of their global activity, is not explained by standard gravity factors; (2) abnormal activity is concentrated in only a few tax havens (Luxembourg, Hong Kong, and Singapore); and (3) abnormal activity has been stable since the introduction of CbCR.

Keywords: tax haven; country-by-country reporting; tax arbitrage; regulatory arbitrage; international banking (search for similar items in EconPapers)
JEL-codes: F23 G21 H22 H32 (search for similar items in EconPapers)
Date: 2025
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