Thursday

20th Sep 2018

European banks stashing billions in tax havens

  • Europe's 20 biggest banks registered €25 billion in tax havens in 2015. (Photo: Burning Robot Factory)

Europe's largest banks are draining public coffers by stashing billions of profits offshore.

A 52-page report, by international aid agency Oxfam out on Monday (27 March), estimates €25 billion of banker money ended up in tax havens in 2015.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

It means fewer funds are going into national budgets to pay for things like health care and education.

The report probed Europe's 20 largest banks and found that Luxembourg remains one of their most profitable tax havens.

The Grand Duchy helped the banks earn some €4.9 billion in profits in 2015 alone.

It notes Europe's fifth largest bank, Barclays, registered over a half billion euros in profits in Luxembourg but paid an effective tax rate of only 0.2 percent.

The Oxfam findings came to light following EU rules that require banks to publicly report profits and tax. Those reports were made public for the first time in 2015.

By compiling the data, Oxfam also found that European banks paid zero tax on profits made in tax havens in places like the Bermuda, the Cayman Islands and the Isle of Man.

RBS, Societe Generale, UniCredit, Santander and BBVA in Ireland even managed to make profits that exceeded their annual turnovers.

"The tax rates paid on these large profits were often much lower than Ireland’s already low statutory corporate income tax rate of 12.5 percent," said the report.

The findings follow revelations in 2014 of secret tax schemes between Luxembourg authorities and some 340 companies and dozens of banks.

Those findings triggered an EU parliament probe, stronger EU rules on tax transparency, and landed the whistle blowers with suspended sentences and fines.

It also follows revelations in 2016 from Mossack Fonseca, Panama-based law firm, that shows how the rich, including some European politicians and criminals, hide their money.

Also known as the Panama Papers leak, it revealed some banks played a key role in a ruse that exploited secretive offshore tax regimes.

Five of those Panama Paper banks, HSBC, Societe Generale, Credit Agricole, BNP Paribas, and Santander, now also figure in the latest Oxfam report.

The scandals have piled on pressure for the EU to further toughen the rules.

Last April, the EU commission proposed legislation that requires multi-nationals to reveal their tax data.

But the plan excludes up to 90 percent of the firms because it only applies to those that have annual turnover of at least €750 million.

It is also limited to those operating inside the EU and tax havens blacklisted by the EU.

Other countries are excluded from the EU proposal, leaving a big loophole for abuse, according to Oxfam.

LuxLeaks whistleblowers sentenced again

PwC employees Antoine Deltour and Raphael Halet, who revealed how multinational companies dodged taxes through deals in Luxembourg, were given reduced sentences.

Investigation

Inside the Code of Conduct, the EU's most secretive group

The informal group of national officials that is in charge of checking EU countries' tax laws is now working on the first EU blacklist of tax havens, amid critiques over its lack of transparency and accountability.

News in Brief

  1. UK's Brexit plan 'won't work', says EU's Tusk
  2. Austria ex-chancellor hints at running for Juncker's job
  3. Greece to move asylum-seekers from overcrowded Lesbos camp
  4. Transatlantic soya trade soars due to trade wars
  5. EU tables strategy for connecting Europe and Asia
  6. Bulgaria backs Hungary in dispute with EU
  7. Trump urged Spain to build Sahara wall to stop migrants
  8. EU-Arab League summit proposed for February in Egypt

Opinion

Building a Europe more resilient to terrorism

One year to the day since the terror attacks in Barcelona and Cambrils, the commissioner for home affairs spells out what action the EU is taking now to protect against further attacks.

Stakeholders' Highlights

  1. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  2. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  3. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  4. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  5. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  6. IPHRCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  7. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  8. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  9. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  10. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  11. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  12. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want

Join EUobserver

Support quality EU news

Join us