European banks and tax havens: evidence from country-by-country reporting

• Published in: Applied economics Vol. 52; no. 54; pp. 5967 - 5985
• Main Author: Janský, Petr
• Format: Journal Article
• Language: English
• Published: London Routledge 19.11.2020; Taylor & Francis Ltd
• Subjects: Banks; Country-by-country reporting; Economic analysis; Economic theory; European Union; profit shifting; Profits; Tax havens; Taxation; Europe
• ISSN: 0003-6846; 1466-4283
• DOI: 10.1080/00036846.2020.1781773

Banks in the European Union have recently started publicly reporting data on profit, employee numbers, turnover and tax on a country-by-country basis; this new data source is capable of indicating to what extent banks' profits are geographically aligned with their activities. I introduce one of the largest, hand-collected, publicly available data sets of its kind, which covers almost 50 banks for up to 5 years between 2013 and 2017. Using the data set, I identify the main locations of European bank's profits, which include major European economies as well as countries often considered tax havens. I find that some of the tax havens have maintained high shares of profits in contrast with their much lower shares of employees or, to a lesser extent, turnover. These results indicate that while banks are likely shifting their profits to tax havens, even more detailed data would need to be published by banks to facilitate a direct observation of profit shifting.