Leading European banks made $ 20 billion in profits between 2014 and 2020. . The data comes from a recent study by the European Tax Observatory (EU Tax Observatory), an independent research center, which tops the list of countries used by large banking groups to reduce tax burden: the Bahamas, Hong Kong, Macao, Bermuda, Ireland, Malta, the British Virgin Islands, and the Virgin Islands. , Cayman, Jersey, Panama (2021 EU blacklisted country), Gibraltar, Kuwait, Qatar, Guernsey, Luxembourg. The reference sample includes 36 European banks, including the largest Italian banks, Intesa Sanpaolo, Unicredit and Monte de Pashi de Siena.

“Permanent presence” in low-tax countries

The analysis records a “permanent presence” of major European groups in tax havens over the past seven years, averaging up to 14% of profits from 2014 to 2020, with estimates of 20 billion in profits referring to these sectors. “The profitability of banks in tax havens – the study reads – is unusually high: 238 thousand euros per employee”, compared to 65 thousand euros in high tax countries. The report, signed by Giulia Aliprandi, Mona Barracke and Paul-Emmanuel Chowk, underscores that “25 per cent of the profits made by European banks are in areas with tax rates below 15 per cent”.

“Particularly favorable tax systems are a major reason for companies, multinational groups and banks to change, resulting in the loss of tax revenue at all levels and the loss of out-of-country jobs,” experts RLVT.

More specifically, the study shows that the effective total tax rate for the seven banks in the sample is less than or equal to 15%: this is the Italian Intuos Sanpolo with Rbs, Barclays, Bayern Lb, North, LB, HSBC and KBC. Even the unicredit shown on the graph of the study just above Intuos has a “tax rate” of less than 20% in the 17% area.

More profit from tax shelters

In addition, at the top of the list of banks that have validated their presence in tax shelters from 2018 to date compared to the period 2018-2016 are two Italians, namely Mps and Intesa, with an increase of 19.4 and 12.2, respectively. %, Followed by Hsbc, Barclays, Nordea, Bbva and Banco Santander. “The study for Intesa Sanpaolo shows that the increase in presence is associated with the fiscal year 2020, during which time the bank made huge losses in Italy”, which is why profits from abroad automatically gained more weight.

The report “does not take into account ordinary tax deductions for accumulated dividends and capital gains” and explains that “the percentage increase in profits made in Ireland and Luxembourg does not depend on changes in assets or profits. A similar argument seems to apply to Mps, “research does not properly represent reality because it is based on incomplete information”.

Global minimum tax

The study continued on how the imposition of a minimum tax would have “significant repercussions from a revenue perspective” for European tax authorities. With the introduction of the 25% rate, the report estimates that a sample of analyzed European banks will have to pay an additional tax of 10 to 13 billion per year. At 21%, additional revenue would fall to $ 6-9 billion and at 15% to $ 3-5 billion. The last percentage representing the lowest global tax that the G20 gave the first green light last July.

Expert opinion

The political consensus on the G20 global minimum tax – Operty observes – represents an important step towards the goal of deploying different tax systems, the so-called “heavenly” countries. From a broader perspective, the global minimum tax may be a test case for countries to adopt more effective tax laws for the taxation of income generated by tech companies that currently (or do not tax) tech based on the laws envisioned for an economy. It is completely different from the current one.

However, the path to the ideal world is still long, with no obstacles. In fact, the RLVT expert observes: ചില Some countries, apart from Ireland and Hungary, have expressed opposition to the G20 proposal. In addition, the tax laws of each country should be reformed in the preamble to a global minimum tax and therefore a political consensus should exist in each country on this issue. To be effective, laws are needed to determine the tax base for revising and standardizing the general tax rate of 15% or other entity. Finally, do not ignore the impact of company tax increases on the prices of consumer goods and services. ⁇