3rd Jul 2022

European banks book €20bn a year in tax havens

  • HSBC, the largest bank, reports 58 percent of all profits in a tax haven, while Swedbank isn not active in tax havens at all. (Photo: George Rex)
Listen to article

The research group EU Tax Observatory reported on Monday (6 September) that 36 major banks in Europe store around €20bn (on average about 14 percent of their yearly profits) in tax havens each year.

That figure has remained stable since 2014, the start of the period under study.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

However, there is a large discrepancy between the banks. HSBC, the largest bank, reports 58 percent of all its profits in a tax haven, while Swedbank is not active in tax havens at all.

Other major banks like Deutsche Bank and Standard Chartered report 21 and 30 percent respectively, a slight decrease compared to 2014 when country-by-country disclosure rules came into effect.

The study also reveals that branches in tax havens show an abnormally high 'profitability-per-employee' ratio.

For example, technically employees in non-tax havens yield a yearly profit of €65,000, while their colleagues in the British Virgin Islands and the Caymans net €2m and €953,000 per annum for their banks, respectively.

This suggests that the profits booked in tax havens have been shifted out of non-tax haven countries - which results in a considerable loss of income for the latter.

EU Tax Observatory estimates that a 25-percent minimum tax rate (the lowest current rate within the seven largest world economies), would net member states an extra €10-€13bn a year in tax revenue. In comparison, a 15-percent minimum tax rate would yield an additional €3 to €5bn in yearly income.

Progress in addressing a global minimum tax rate has been slow, but US president Joe Biden recently secured the backing of 130 countries for a figure of 15 percent, in a potential breakthrough.

"With a global minimum tax in place, multinational corporations will no longer be able to pit countries against one another in a bid to push tax rates down," Biden said .

The deal, which is supported by Germany and France, but opposed by Ireland and Hungary, is to be finalised in October and come into effect in 2023.


Hungary: why we can't support a global minimum tax

This month the OECD Inclusive Framework agreed on the main building blocks of new tax legislation for a global minimum tax and for the digital economy. However, Hungary did not join - this is why.

EU Commission eyes unified corporate tax, again

The previous two efforts for a unified corporate tax framework have run into the ground, because the unanimity required by the member states to agree such a scheme was unachievable. Ireland, Denmark, Luxembourg, Malta, Sweden and the Netherlands were opposed.

EU silent on Amazon's 'zero corporate tax' scandal

The European Commission declined to comment on the latest tax scandal revelation, where Amazon managed to pay no corporate sales tax in Europe - despite declaring €44bn in sales income.

Tax advocates slam EU country-by-country directive

Country-by-country reporting (CDCR) will require non-EU multinationals doing business in the EU through subsidiaries to comply with the same rules as European companies. However, companies are allowed to defer disclosure of certain information for a maximum of five years.

Greta Thunberg leads pan-Europe COP26 climate protests

In total 50 financial centres around the world were targeted on Friday to usher in the United Nations Climate Change Conference in Glasgow, also known as COP26, with Greta Thunberg in the City of London.


Nato's Madrid summit — key takeaways

For the most part Nato and its 30 leaders rose to the occasion — but it wasn't without room for improvement. The lesson remains that Nato still doesn't know how or want to hold allies accountable for disruptive behaviour.


One rubicon after another

We realise that we are living in one of those key moments in history, with events unfolding exactly the way Swiss art historian Jacob Burckhardt describes them: a sudden crisis, rushing everything into overdrive.

News in Brief

  1. EU Parliament 'photographs protesting interpreters'
  2. Poland still failing to meet EU judicial criteria
  3. Report: Polish president fishing for UN job
  4. Auditors raise alarm on EU Commission use of consultants
  5. Kaliningrad talks needed with Russia, says Polish PM
  6. Report: EU to curb state-backed foreign takeovers
  7. EU announces trade deal with New Zealand
  8. Russia threatens Norway over goods transit

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  2. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  3. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  4. Council of the EUEU: new rules on corporate sustainability reporting
  5. Nordic Council of MinistersNordic ministers for culture: Protect Ukraine’s cultural heritage!
  6. Reuters InstituteDigital News Report 2022

Latest News

  1. Nato's Madrid summit — key takeaways
  2. Czech presidency to fortify EU embrace of Ukraine
  3. Covid-profiting super rich should fight hunger, says UN food chief
  4. EU pollution and cancer — it doesn't have to be this way
  5. Israel smeared Palestinian activists, EU admits
  6. MEPs boycott awards over controversial sponsorship
  7. If Russia collapses — which states will break away?
  8. EU Parliament interpreters stage strike

Join EUobserver

Support quality EU news

Join us