TY - JOUR

T1 - A victim of regulatory arbitrage? Automatic exchange of information and the use of golden visas and corporate shells

AU - Ahrens, Leo

AU - Hakelberg, Lukas

AU - Rixen, Thomas

N1 - Funding Information: Funding by the European Commission for the Horizon 2020‐Project “Combatting Fiscal Fraud and Empowering Regulators (COFFERS)” is gratefully acknowledged. We had helpful discussions with Andres Knobel, Markus Meinzer and Jakob Miethe about these and related issues and we learned a lot from the thoughtful comments of the anonymous reviewers. Svenja Schrader, Felicia Riethmüller, and Lea Maurer provided research assistance and helped with data collection. We thank all of them! Open access funding enabled and organized by Projekt DEAL. 1 Publisher Copyright: © 2020 The Authors. Regulation & Governance published by John Wiley & Sons Australia, Ltd.

PY - 2022/7/1

Y1 - 2022/7/1

N2 - The multilateral adoption of the automatic exchange of information (AEI) on bank accounts held by nonresidents was a breakthrough in the fight against cross-border tax evasion, which led to a substantial reduction in the value of bank deposits and investment portfolios in traditional tax havens. However, there is suspicion that sophisticated tax evaders engage in regulatory arbitrage of AEI provisions. We examine whether two widely discussed secrecy schemes, namely golden visas and anonymous trusts and shell corporations, have been used to circumvent information reporting. Relying on a difference-in-difference design, we only find scattered evidence for use of the secrecy schemes. Overall, our results suggest that regulatory arbitrage is not yet widespread, but it seems to increase over time. We thus provide evidence for the current effectiveness of the AEI but also show that closing remaining loopholes is of utmost importance. We link our findings to debates about the (im)possibility of re-embedding neoliberal globalization.

AB - The multilateral adoption of the automatic exchange of information (AEI) on bank accounts held by nonresidents was a breakthrough in the fight against cross-border tax evasion, which led to a substantial reduction in the value of bank deposits and investment portfolios in traditional tax havens. However, there is suspicion that sophisticated tax evaders engage in regulatory arbitrage of AEI provisions. We examine whether two widely discussed secrecy schemes, namely golden visas and anonymous trusts and shell corporations, have been used to circumvent information reporting. Relying on a difference-in-difference design, we only find scattered evidence for use of the secrecy schemes. Overall, our results suggest that regulatory arbitrage is not yet widespread, but it seems to increase over time. We thus provide evidence for the current effectiveness of the AEI but also show that closing remaining loopholes is of utmost importance. We link our findings to debates about the (im)possibility of re-embedding neoliberal globalization.

KW - automatic exchange of taxpayer information

KW - capital taxation

KW - financial transparency

KW - globalization

KW - golden visa

KW - tax evasion

KW - Politics

UR - http://www.scopus.com/inward/record.url?scp=85092551754&partnerID=8YFLogxK

U2 - 10.1111/rego.12363

DO - 10.1111/rego.12363

M3 - Journal articles

AN - SCOPUS:85092551754

VL - 16

SP - 653

EP - 672

JO - Regulation and Governance

JF - Regulation and Governance

SN - 1748-5983

IS - 3

ER -