Survival of the Richest

Europe's role in upholding an unjust tax system
Box 5
Country by country reporting by big banks
Public country by country reporting for financial
institutions was adopted in the EU in 2013 161 and the
first data has now been published by EU headquartered
banks. As the EU is currently discussing the extension of
this reporting requirement to cover all big multinationals,
it is worth looking at what the legislation has meant for
the financial sector.
First, there has been no sign of negative side effects
to banks as a result of more public disclosure. In fact,
at a hearing in the European Parliament in November
2015, HSBC and Barclays stated their support for public
country by country reporting. 162 Research carried out by
Transparency International also concludes that there is
no link between public disclosure of country by country
information and a company’s competitiveness. 163
Second, and in more practical terms, a lesson can
be learnt regarding how public CBCR should be done.
According to a study by PwC, both Member States
and banks have interpreted the text of the directive in
different ways, which means there is a large difference
in the format and content of the reports. 164 For country
by country information to be fit for purpose and easily
comparable with other data sets, Member States
should receive enough guidance to ensure coherent
implementation. The reports should also be published
in machine readable open data format, preferably in a
centralised register.
Third, despite these shortcomings, it is already clear that
the reporting has been useful in enabling civil society
to ask more informed questions about the economic
activities of banks. For example, a report published
by French CSOs on the biggest French banks shows a
significant discrepancy between business activities and
the banks’ reported profits in different countries. 165 The
five banks investigated disclosed having 16 subsidiaries in
the Cayman Islands alone, with not a single staff member.
Yet Credit Agricole, for example, declared €35 million in
profits from the Caymans. 166 The study also shows that
the banks made a third of their international profits in tax
havens – close to €5 billion – even though only one-sixth
of their total number of employees are located in these
jurisdictions. 167 This goes to show that making country
by country reports public will enable journalists and civil
society, as well as decision makers, to get a clearer picture
about international money flows and thus have a more
informed debate on international taxation.
30 • Survival of the Richest