European banks store €20bn in tax havens every year

Leading banks in Europe are storing €20 billion, or 14 per cent of their total profits, in tax havens each year.

According to a new report from the EU Tax Observatory, the percentage of profits has remained the same since 2014, despite the introduction of mandatory information disclosure.

The organisation, which conducts research on taxation, said that bank profitability in tax havens is “abnormally high” at €238000 per employee, in comparison to €65000 in non-haven countries.

This suggests that the profits booked in tax havens are primarily shifted out of other countries where service production occurs.

Around 25 per cent of the profits made by the European banks in the report’s sample are booked in countries with an effective tax rate lower than 15 per cent.

Seven banks in the sample exhibited a particularly low effective tax rate, lower or equal to 15 per cent. Three of these were British institutions: RBS (NatWest), Barclays, and HSBC.

The other banks identified as having a lower tax rate were: Bayern LB, Nord LB, HSBC, KBC, and Intesa Sanpaolo.

“HSBC is the largest bank in Hong Kong, with c. 30,000 employees, and because of our heritage, size of operations and strategy, a significant proportion of the Group’s profits continue to arise there," said an HSBC spokesperson. "HSBC does not employ tax avoidance strategies to artificially divert profits to low-tax jurisdictions.”

Barclays said that it was not making any comment on the report, however noted that the bank was ranked as the fifth largest UK taxpayer in the most recent PwC Total Tax Contribution survey of the One Hundred Group.

FStech has reached out to the NatWest for comment.

    Share Story:

Recent Stories


The Future of Intelligent Finance
FStech Group Editor Mark Evans sits down with Jason Cao, President of Global Financial Services Business Unit, Enterprise BG at Huawei ahead of its Intelligent Finance Summit which was held on 3rd and 4th of June in Shanghai. This Q&A delves into key trends in digital transformation of the financial services industry as well as a look at how data, robotic infrastructure, intelligent storage and innovative technologies are shaping the future for FSIs.

The Rise of Instant Payments
Instant payments are creating new business opportunities for banks by providing more touchpoints than ever. With these evolutions underway, Featurespace brought leading industry experts together to discuss how they are protecting customers from fraudsters in real time, utilizing innovative and disruptive solutions to reduce fraud. Click here to find out more.

Offloading Cyber Risk in the Cloud
As cyber attacks and data breaches are in the news on an increasingly regular basis - with regulatory penalties and customer trust on the line for financial services firms - it has never been more crucial to be compliant in the cloud.

This video, with Akamai’s EMEA director of security technology and strategy Richard Meeus, will help explain what your company can be doing to make sure it’s not embroiled in the next big fine or front-page scandal.