CEPII, Recherche et Expertise sur l'economie mondiale
Banks Defy Gravity in Tax Havens


Vincent Bouvatier
Gunther Capelle-Blancard
Anne-Laure Delatte

 Highlights :
  • Tax havens generate a threefold extra presence of foreign banks.
  • The favorite destinations of tax evasion intermediated by European banks are Luxembourg and Monaco.
  • British and German banks display the most aggressive strategies in tax havens.
  • New transparency requirements imposed in 2015 have not changed European banks commercial presence in tax havens.
  • Banks intermediate Euros 550 billion of offshore deposits, that is 5% of their origin countries' GDP.

 Abstract :
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 EUROS 550 billion of offshore deposits, that is 5% of their origin countries' GDP.

 Keywords : Tax evasion | International banking | Tax havens | Country-by-country reporting

 JEL : F23, G21, H22, H32
CEPII Working Paper
N°2017-16, September 2017

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 Domaines d'expertise

Monnaie & Finance
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