9th Dec 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.


No, Bosnia and Herzegovina is not ready for the EU

The European Commission has asked the member states' leaders assembling in Brussels next week for the customary end-of-year European Council to approve EU candidate status for Bosnia and Herzegovina. Doing so would be a mistake.

Stakeholders' Highlights

  1. Nordic Council of MinistersLarge Nordic youth delegation at COP15 biodiversity summit in Montreal
  2. Nordic Council of MinistersCOP27: Food systems transformation for climate action
  3. Nordic Council of MinistersThe Nordic Region and the African Union urge the COP27 to talk about gender equality
  4. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  5. Friedrich Naumann Foundation European DialogueGender x Geopolitics: Shaping an Inclusive Foreign Security Policy for Europe
  6. Obama FoundationThe Obama Foundation Opens Applications for its Leaders Program in Europe

Latest News

  1. EU lets Croatia into Schengen, keeps Bulgaria and Romania out
  2. Energy crisis costs thousands of EU jobs, but industrial output stable
  3. Illegal pushbacks happening daily in Croatia, says NGO
  4. No, Bosnia and Herzegovina is not ready for the EU
  5. EU takes legal action against China over Lithuania
  6. EU Commission shoring up children's rights of same-sex parents
  7. The military-industrial complex cashing-in on the Ukraine war
  8. EU delays Hungary funds decision, as Budapest vetoes Ukraine aid

Join EUobserver

Support quality EU news

Join us