European banks book €20bn in tax heavens

Photo: Europost

The European banks are very far from halting operations with tax heavens to book their profits. This practice was little changed since 2014 even after country by country disclosures are becoming mandatory, the EU Tax Observatory noted in an official report.

The independent organisation which is co-financed by the EU confirmed disclosures from 36 major European banks that showed they booked a total of 20 billion euros or about 14% of total profits, in tax havens, even though few were employed there, Reuters elaborated.

Profits booked by banks in tax havens account at around 238,000 per employee, compared with 65,000 euros in non-tax havens, the report said. "This suggests that the profits booked in tax havens are primarily shifted out of other countries where service production occurs," it noted. Taxes have become a sensitive issue, with cash-strapped governments which are filling holes in economies caused by Covid-19 pandemic.

Country by country reporting to shed light on the inner workings of banks has failed to change behaviour despite the rise of tax issues on the public agenda, the report said, adding that "more ambitious initiatives - such as a global minimum tax with a 25% rate - may be necessary to curb the use of tax havens by the banking sector."

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