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Luxembourg, Ireland favourite 'tax havens' for banks, Oxfam claims
Economics

Luxembourg, Ireland favourite 'tax havens' for banks, Oxfam claims

2 min. 27.03.2017 From our online archive
Twenty biggest banks in eurozone booked more than one-quarter of 2015 profits in 'tax havens', with Luxembourg and Ireland the favoured destinations, according to report published by charity Oxfam.

(AFP) The 20 biggest banks in the eurozone booked more than one-quarter of their 2015 profits in tax havens, with Luxembourg and Ireland the favoured destinations, a report by Oxfam claimed on Monday.

The findings come as multinational companies' tax affairs face increasing scrutiny, after the LuxLeaks and Panama Papers scandals shone a spotlight on the methods used by some to avoid paying tax.

Manon Aubry, a tax specialist at Oxfam, said: "New EU transparency rules give us a glimpse into the tax affairs of Europe's biggest banks, and it's not a pretty sight."

Luxembourg, Ireland most favoured

"Governments must change the rules to prevent banks and other big businesses using tax havens to dodge taxes or help their clients dodge taxes," Aubry said.

Luxembourg and Ireland were the most favoured tax havens, according to Oxfam.

Its report claimed that Europe's 20 biggest banks posted more profits in the small EU country of Luxembourg than they did in the UK, Sweden and Germany combined.

It said 'tax havens' accounted for 26% of the profits made by the 20 biggest banks in Europe, adding up to an estimated 25 billion euros.

By example, Barclays, Europe's fifth-biggest bank in 2015, booked profits of 557 million euros in Luxembourg and paid 1 million euros in taxes, an effective tax rate of 0.2%, Oxfam said.

Tax-free profits, zero employed staff

The report found that European banks posted 628 million euros in profit in 'tax havens' where they employed zero staff.

These countries include Bermuda, the Cayman Islands�, Curaçao�, Cyprus�, Lebanon, Malta, Mauritius and the British Virgin Islands.

In the Cayman Islands, for example, France's BNP Paribas booked 134 million euros in profit tax free without a single employee present, Oxfam said. 

Other banks reported profits in 'tax havens' while reporting losses elsewhere.

In 2015, Deutsche Bank registered no or low profits in several major markets while booking almost 2 billion euros of profits in so-called tax havens.

Oxfam uncovered the data using new EU legislation that requires banks to report their profit on a country by country basis.

The law is intended to stop big banks from artificially shifting their profits to low-tax wealth centres with very low, or zero, corporate tax rates.

"These rules must now be extended to ensure all large corporations provide financial reports for every country where they operate," Aubry said.

"This will make it easier for all countries, including the poorest, to establish if companies are paying their fair share of tax or not."