European banks report $24 billion in offshore profits - Cayman Compass

Europe’s largest banks are booking 14% of their profits, about US$24 billion, in low-tax centres every year, according to a report by EU Tax Observatory.

The independent research lab hosted at the Paris School of Economics said based on country-by-country data reported by 36 systemic banks themselves, their presence in “tax havens” had remained stable since 2014.

The group’s report “Have European banks left tax havens? Evidence from country-by-country data” concluded that on average, annual profits in 17 “tax havens” were around EUR238,000 per employee, compared to around EUR65,000 in other European countries, “suggesting that much of the profits booked in tax havens are transferred out of other countries where services are produced”.

However, the researchers acknowledge that the data does not allow visibility on assets or deposits on a national basis, “which weakens the identification of tax planning behaviour”.

The data itself shows a vast disparity in the use of offshore financial centres by banks, ranging from 0% to 58% in terms of the share of total profits. The number of banking subsidiaries located offshore has also declined considerably since 2014.

While eight banks increased their presence offshore, 16 had decreased their use of “tax havens” the data showed.

The report used a list of 17 tax havens derived from the banks’ effective tax rates and profitability per employee in these jurisdictions. The list includes The Bahamas, Bermuda, British Virgin Islands, the...



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