Economics at your fingertips  

Profit shifting by EU banks: evidence from country-by-country reporting

Serena Fatica () and Wildmer Daniel Gregori

No 2018-04, Working Papers from Joint Research Centre, European Commission (Ispra site)

Abstract: We investigate profit shifting by the largest and systemically relevant European multinational banks using new data made available through country-by-country reporting for the financial years 2014-2016. We capture tax incentives for income shifting using a multilateral tax differential between the local tax rate and the tax rates in the other countries where the bank has operations. We find that profits - particularly those recorded in tax havens - are negatively affected by corporate taxation. Moreover, the bulk of income shifting seems to take place among subsidiaries, as foreign-to-foreign tax differences matter significantly more that home-to-foreign differentials. Simulation results suggest that the amount of shifted profits in tax havens is about 38% of true profits. The ratio between shifted and true profits drops to about 7% when selected non havens are considered.

Keywords: banks; tax havens; regulation; tax avoidance; transparency (search for similar items in EconPapers)
JEL-codes: G21 G28 H26 H87 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban and nep-eec
Date: 2018-06
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Published by Publications office of the European Union, 2018

Downloads: (external link) ... ica_gregori_2018.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in Working Papers from Joint Research Centre, European Commission (Ispra site) Contact information at EDIRC.
Bibliographic data for series maintained by Peter Benczur ().

Page updated 2019-04-24
Handle: RePEc:jrs:wpaper:201804