European banks book $24 billion per year in tax havens

According to a new report, Europe’s largest banks book around 20 billion euros, equal to $23.8 billion, in tax havens every year.

The analysis found that it accounts for around 15% of their total earnings.

The report from the EU Tax Observatory published Monday said that they looked into the actions of 37 systemic European banks that have been subject to mandatory information on their activities since 2015.

The report’s tax haven list included Seventeen jurisdictions: the Bahamas, the British Virgin Islands, Bermuda, the Cayman Islands, Gibraltar, Guernsey, Hong Kong, Ireland, Jersey, Kuwait, Isle of Man, Luxembourg, Macao, Mauritius, Malta, Panama, and Qatar.

The report noted that around 66% of banks’ earnings were from abroad between 2014 and 2020. Researchers documented misleading information between the countries with booked profits and the location of employees. According to the report, earnings per employee seemed larger in tax havens than in some other countries. Subsidiaries in tax havens are reporting profit margins with high profitability.

Researchers also mentioned that they saw 25% of the banks’ profits booked in countries with an effective tax rate lower than 14%.

They said in the report that this evidence shows a significant presence of European banks and their regular use of tax havens over the years.

Researchers also say that the Bank profitability in tax havens seem unusually high, equal to 238,000 euros per employee, while in non-haven countries, they were reporting 66,000 euros. It means that the earnings booked in tax havens are moved from countries of service production.

Variation between banks

The analysis found that the use of tax havens differed between banks. In fact, the data showed that the total percentage of profits booked in tax havens was approximately 21% between 2014 and 2020, ranging from 0% to 59%.

Lastly, researchers identified several banks as having a moderately high appearance in tax havens.