European Banks book $27b profit

london — Europe’s largest banks routed €25 billion ($27 billion) through tax havens in 2015, about a quarter of their profit, amid an international crackdown on corporate tax avoidance, according to a report by Oxfam International.

The 20 biggest lenders paid no tax on €383 million of profit posted in seven tax havens that year, while booking €4.9 billion of earnings in Luxembourg, more than the UK, Sweden and Germany combined, Oxfam and the Fair Finance Guide International said Monday. The study was based on data released under new European Union regulations requiring banks to report earnings on a country-by-country basis.

Banks’ subsidiaries in low-tax jurisdictions are twice as profitable as offices elsewhere and employees are four times more productive, generating an average profit of €171,000 per person annually compared to €45,000 on average, according to the report.

Some of the world’s largest companies have been criticised for funneling profits through places such as the British territories of Bermuda and the Cayman Islands, and Ireland, prompting promises of harsher measures from governments to ensure they collect more tax. The Organisation for Economic Cooperation and Development has released a plan aimed at limiting companies’ ability to get low rates in jurisdictions where they lack genuine economic activity, estimating profit-shifting costs governments as much as $240 billion a year in lost revenue. — Bloomberg