Details
| Original language | English |
|---|---|
| Article number | 104865 |
| Journal | Journal of public economics |
| Volume | 221 |
| Early online date | 30 Mar 2023 |
| Publication status | Published - May 2023 |
Abstract
With automatic exchange of tax information among countries now common, tax evaders have had to find new ways to hide their offshore holdings. One such way is citizenship-by-investment, which offers foreigners a new passport for a local investment or a fixed fee. We show analytically that high-income individuals acquire a new citizenship to lower the probability that their tax evasion is detected through information exchange. Using data on cross-border bank deposits, we find that deposits in tax havens increase after a country starts offering a citizenship-by-investment program, providing indirect evidence that tax evaders use these programs.
Keywords
- Citizenship-by-investment programs, Tax evasion, Tax havens
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
- Finance
- Economics, Econometrics and Finance(all)
- Economics and Econometrics
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In: Journal of public economics, Vol. 221, 104865, 05.2023.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Escaping the exchange of information
T2 - Tax evasion via citizenship-by-investment
AU - Langenmayr, Dominika
AU - Zyska, Lennard
N1 - Funding Information: We thank four anonymous reviewers, the editor (Owen Zidar), as well as Leo Ahrens, Kat Bilicka, Vojtěch Bartoš, Matthew Collin, Alexander Danzer, Aixa García-Ramos, Lukas Hakelberg, Steffen Juranek, Jakob Miethe, Florian Morath, Ray Rees (†), Thomas Rixen, Dirk Schindler, Barbara Stage, Kristin Surak, Simon Wiederhold, Edward N. Wolff, Floris Zoutman, and seminar participants in Copenhagen, Dresden, Exeter, Freiburg, Hamburg, Ingolstadt, Jena, Munich, Passau, Vienna, and at the IIPF, NTA and EEA conferences for valuable comments and suggestions. Zyska worked on this project while visiting NHH Bergen and NYU; he gratefully acknowledges their hospitality as well as funding by the Bavarian Graduate Program in Economics.
PY - 2023/5
Y1 - 2023/5
N2 - With automatic exchange of tax information among countries now common, tax evaders have had to find new ways to hide their offshore holdings. One such way is citizenship-by-investment, which offers foreigners a new passport for a local investment or a fixed fee. We show analytically that high-income individuals acquire a new citizenship to lower the probability that their tax evasion is detected through information exchange. Using data on cross-border bank deposits, we find that deposits in tax havens increase after a country starts offering a citizenship-by-investment program, providing indirect evidence that tax evaders use these programs.
AB - With automatic exchange of tax information among countries now common, tax evaders have had to find new ways to hide their offshore holdings. One such way is citizenship-by-investment, which offers foreigners a new passport for a local investment or a fixed fee. We show analytically that high-income individuals acquire a new citizenship to lower the probability that their tax evasion is detected through information exchange. Using data on cross-border bank deposits, we find that deposits in tax havens increase after a country starts offering a citizenship-by-investment program, providing indirect evidence that tax evaders use these programs.
KW - Citizenship-by-investment programs
KW - Tax evasion
KW - Tax havens
UR - http://www.scopus.com/inward/record.url?scp=85151273360&partnerID=8YFLogxK
U2 - 10.1016/j.jpubeco.2023.104865
DO - 10.1016/j.jpubeco.2023.104865
M3 - Article
AN - SCOPUS:85151273360
VL - 221
JO - Journal of public economics
JF - Journal of public economics
SN - 0047-2727
M1 - 104865
ER -