Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/202296 
Year of Publication: 
2018
Series/Report no.: 
JRC Working Papers in Economics and Finance No. 2018/4
Publisher: 
Publications Office of the European Union, Luxembourg
Abstract: 
We investigate profit shifting by the largest and systemically relevant European multinational banks using new data made available through country-by-country reporting for the financial years 2014-2016. We capture tax incentives for income shifting using a multilateral tax differential between the local tax rate and the tax rates in the other countries where the bank has operations. We find that profits - particularly those recorded in tax havens - are negatively affected by corporate taxation. Moreover, the bulk of income shifting seems to take place among subsidiaries, as foreign-to-foreign tax differences matter significantly more that home-to-foreign differentials. Simulation results suggest that the amount of shifted profits in tax havens is about 38% of true profits. The ratio between shifted and true profits drops to about 7% when selected non havens are considered.
Subjects: 
banks
tax havens
regulation
tax avoidance
transparency
JEL: 
G21
G28
H26
H87
Persistent Identifier of the first edition: 
ISBN: 
978-92-79-82749-5
Document Type: 
Working Paper

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