DP12222 Banks Defy Gravity in Tax Havens

Author(s): Vincent Bouvatier, Gunther Capelle-blancard, Anne-Laure Delatte
Publication Date: August 2017
Date Revised: June 2018
Keyword(s): Country-by-country reporting, International Banking, tax evasion, tax havens
JEL(s): F23, G21, H22, H32
Programme Areas: Public Economics, Financial Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=12222

This paper provides the first quantitative assessment of the contribution of global banks in intermediating tax evasion. Applying gravity equations on a unique regulatory dataset based on comprehensive individual country-by-country reporting from all the Systemically Important Banks the European Union, we find that: 1) Tax havens generate a threefold extra presence of foreign banks; 2) The favorite destinations of tax evasion intermediated by European banks are Luxembourg and Monaco 3) British and German banks display the most aggressive strategies in tax havens ; 4) New transparency requirements imposed in 2015 have not changed European banks commercial presence in tax havens; 5) Banks intermediate e550 billion of offshore deposits, that is 5% of their origin countries' GDP.