Tuesday

28th Nov 2023

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.

Opinion

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.

Opinion

'Loss and Damage' reparations still hang in balance at COP28

There is still work to be done — especially when it comes to guaranteeing the Global North's participation in financing Loss and Damage, and ensuring the Global South has representation and oversight on the World Bank's board.

Latest News

  1. Member states stall on EU ban on forced-labour products
  2. EU calls for increased fuel supplies into Gaza
  3. People-smuggling profits at historic high, EU concedes
  4. EU bets big on fossil hydrogen and carbon storage
  5. How centre-right conservatives capitulate to the far-right
  6. My experience trying to negotiate with Uber
  7. Key battlegrounds in EU's new media legislation
  8. EU 'shocked' by Israel's war-time settler surge

Stakeholders' Highlights

  1. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  2. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?
  3. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  4. UNOPSFostering health system resilience in fragile and conflict-affected countries
  5. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  6. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste

Join EUobserver

Support quality EU news

Join us