European banks stashing billions in tax havens
Europe’s largest banks are draining public coffers by stashing billions of profits offshore.
A 52-page report, by international aid agency Oxfam out on Monday (27 March), estimates €25 billion of banker money ended up in tax havens in 2015.
It means fewer funds are going into national budgets to pay for things like health care and education.
The report probed Europe’s 20 largest banks and found that Luxembourg remains one of their most profitable tax havens.
The Grand Duchy helped the banks earn some €4.9 billion in profits in 2015 alone.
It notes Europe’s fifth largest bank, Barclays, registered over a half billion euros in profits in Luxembourg but paid an effective tax rate of only 0.2 percent.
The Oxfam findings came to light following EU rules that require banks to publicly report profits and tax. Those reports were made public for the first time in 2015.
By compiling the data, Oxfam also found that European banks paid zero tax on profits made in tax havens in places like the Bermuda, the Cayman Islands and the Isle of Man.
RBS, Societe Generale, UniCredit, Santander and BBVA in Ireland even managed to make profits that exceeded their annual turnovers.
“The tax rates paid on these large profits were often much lower than Ireland’s already low statutory corporate income tax rate of 12.5 percent,” said the report.
The findings follow revelations in 2014 of secret tax schemes between Luxembourg authorities and some 340 companies and dozens of banks.
Those findings triggered an EU parliament probe, stronger EU rules on tax transparency, and landed the whistle blowers with suspended sentences and fines.
It also follows revelations in 2016 from Mossack Fonseca, Panama-based law firm, that shows how the rich, including some European politicians and criminals, hide their money.
Also known as the Panama Papers leak, it revealed some banks played a key role in a ruse that exploited secretive offshore tax regimes.
Five of those Panama Papers banks – HSBC, Societe Generale, Credit Agricole, BNP Paribas, and Santander – now also figure in the latest Oxfam report.
The scandals have piled on pressure for the EU to further toughen the rules.
Last April, the EU commission proposed legislation that requires multi-nationals to reveal their tax data.
But the plan excludes up to 90 percent of the firms because it only applies to those that have annual turnover of at least €750 million.
It is also limited to those operating inside the EU and tax havens blacklisted by the EU.
Other countries are excluded from the EU proposal, leaving a big loophole for abuse, according to Oxfam.
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