A study by the European Tax Observatory shows that almost a quarter of European banks' profits are booked in territories with particularly advantageous tax regimes. Its publication comes just at the right time, as the creation of a 15% worldwide minimum tax for multinationals looms on the horizon.
Tax havens: some 40 banks under the microscope
The European Tax Observatory, an independent research center hosted by the Paris School of Economics, has studied data published by some 40 banks between 2014 and 2020. This Eutax Observatory study, published on September 6, 2021, reveals that Europe's leading banks are taking advantage of tax havens to lower their taxes. More specifically, 25% of the profits of these financial institutions are recorded in countries where the effective tax rate is below 15%.
Among the most popular destinations are :
- the Bahamas,
- Cayman Islands,
- Jersey and Guernsey,
- Hong Kong,
- Malta,
- Luxembourg.
Yet some territories do not appear on the European Union's blacklist of tax havens.
According to the document, 7 banks have a tax rate below 15%. The overall champion is HSBC Bank, whose pre-tax profits over the last two years have been booked in countries identified as tax havens. Next in line are Italy's Dei Paschi and Deutsche Bank.
The Observatoire estimates that the application of a minimum rate of 15% on banks would generate 3 to 5 billion euros in additional revenue.
Banks defend themselves
In response to this data, HSBC cites its historical heritage in Hong Kong, while Deutsche Bank points out that of the 60 countries in which it operates, none is on the European list of uncooperative countries and territories for tax purposes.
In France, Société Générale, Crédit Agricole and BNP Paribas say they have reduced their activities in these countries since 2014. Indeed, the share of profits made by French banks in tax havens has fallen since 2014, with the tax deficit for France calculated on the basis of a minimum tax of 15% standing at 343 million euros in 2020, compared with 490 million euros in 2014.
A global minimum tax for businesses
At the beginning of June, the G20 countries committed to the goal of a minimum corporate tax of at least 15%. This global tax will apply to multinationals with revenues in excess of $890 million. It will help combat tax optimization and evasion by redirecting part of the taxes paid by these players to the countries where their products and services are sold.
The countries have yet to agree on the implementation of this new system, which includes the redistribution of tax revenues between them, with the next meeting scheduled for October.