Financial Transparency Coalition

New research by the anti-corruption watchdog Transparency International EU (TI EU) on the tax affairs of some of Europe’s largest banks from 2015 to 2019 suggests widespread use of tax havens and profit shifting. The findings have been published today on TI EU’s Corporate Tax Tracker platform and analysed in the new report “Murky havens and phantom profits: the tax affairs of EU and UK banks”.

Among the 39 EU and UK banks looked at in the study, 31 were using low-tax or zero-tax havens, while 29 of them appeared to be declaring high profits in countries where they did not actually employ any staff. These ‘ghost operations’ may indicate that banks are shifting their profits to reduce their tax bill. Without full details on banks’ operations in the countries concerned it is impossible to tell.

Several banks discussed in the research, including HSBC, Barclays, Deutsche Bank and Standard Chartered, were implicated in the recent FinCEN scandal, which alleged their involvement in moving dirty money across the globe.

Since 2015, EU banks have been required to publish country-by-country reports of their profits, taxes and number of employees for every jurisdiction in which they operate. The banking and extractives sectors are the only industries that are subject to such regulations.

The researchers analysed five years’ worth of these reports and used the data to build an online platform, the Corporate Tax Tracker, which will enable closer public scrutiny of major banks.

Transparency International is one of eleven member organizations of the Financial Transparency Coalition (FTC). The Corporate Tax Tracker website and the report “Murky Havens and Phantom Profits: The Tax Affair of EU Banks” have been produced with support from the FTC, under the Public Country-by-Country working group.