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European banks still booking profits in tax havens – report

Top banks in Europe continue to use tax havens to book chunks of profits, a trend that has changed little since 2014 despite country-by-country disclosures becoming mandatory, the EU Tax Observatory said in a report.

The independent research body is co-financed by the European Union.

It said disclosures from 36 major European banks showed they booked a total of €20 billion or about 14% of total profits, in tax havens, even though few were employed there.

Profits booked by banks in tax havens work out at around 238,000 per employee, compared with 65,000 euros in non-tax havens, the report said.

“This suggests that the profits booked in tax havens are primarily shifted out of other countries where service production occurs,” it added.

The EU Tax Observatory said it created a list of tax haven jurisdictions used by the banking sector – combining two indicators to identify tax havens: the effective tax rate on bank profit and the amount of bank profit per employee.

Overall, 17 jurisdictions feature on its list – Bahamas, Bermuda, the British Virgin Islands, Cayman Islands, Guernsey, Gibraltar, Hong Kong, Ireland, Isle of Man, Jersey, Kuwait, Luxembourg, Macao, Malta, Mauritius, Panama and Qatar.

Taxes have become a sensitive issue, with cash-strapped governments plugging holes in the economy due to COVID seeking to agree on a common rate for taxing Big Tech, in particular.

Country-by-country reporting to shed light on the inner workings of banks has failed to change behaviour despite the rise of tax issues on the public agenda, the report said.

“More ambitious initiatives – such as a global minimum tax with a 25% rate – may be necessary to curb the use of tax havens by the banking sector,” the report added.

No Irish banks are included in the list.

Article Source – European banks still booking profits in tax havens – RTE

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