Posted on Sep 6, 2021 at 8:34 am
Tax havens still attract the banks of the Old Continent. According to a study by the European Tax Observatory, an independent research office, they have maintained their presence there in recent years, despite several scandals about the dubious practices of multinationals.
The main European banks each year record 14% of their total profits, or 20 billion euros, in territories with particularly favorable taxation. A stable percentage since 2014.
“Despite the growing importance of these issues in public debate and in the political world, European banks have not significantly reduced their use of tax havens,” says the Observatory, which is funded by the European Commission and led by French economist Gabriel Zucman.
238,000 euros per employee
The organization reviewed the data published by 36 financial institutions for the period 2014-2020. It identifies seventeen states and territories as preferred destinations in the world, including the Bahamas, the British Virgin Islands, the Cayman Islands, Jersey and Guernsey, Gibraltar, Hong Kong, Macao, Panama or even Malta and Luxembourg.
“The profits recorded in tax havens are abnormally high: 238,000 euros per employee, against 65,000 euros in other countries. This suggests that the profits recorded in tax havens are essentially displaced from other countries where the production of services takes place, ”say experts from the Observatory.
HSBC in the lead, Société Générale French premiere
Among the big banks, they identify the Sino-British HSBC as the champion of these practices. More than 62% of its pre-tax profits were recorded in tax havens between 2018 and 2020, far ahead of the Italian Monte dei Paschi (BMPS), which totals 49.8%. Standard Chartered (29.8%) completes the podium. The German Deutsche Bank and NordLB come in 4th and 5th position.
As for French groups, Societe Generale is the most exposed, with 13.8% of its profits in tax havens, ahead of Crédit Agricole (11.5%) and BNP Paribas (6.9%). But the three have reduced their activity in these countries compared to the period 2014-2016, notes according to the research office.
Negotiations underway at the OECD
The LuxLeaks scandals in 2014, followed by the Panama papers, brought the subject of tax evasion to the fore and led to a tightening of financial transparency obligations. Negotiations are underway at the OECD for a minimum taxation of the profits of multinationals in order to fight against tax havens.
The Observatory estimates that a minimum rate of 15% on banks would generate 3 to 5 billion euros in additional revenue for European countries. Figures that would reach 10 to 13 billion with a rate of 25%.