Ghost banks operating out of Malta to pay minimal taxes generated some €590 million on average in profits despite employing zero staff, a report by Transparency International has uncovered.
In an analysis of 39 major banks, Malta grabbed the European top spot when it came to ghost banks, with 14 off such operating in the country with practically negligible staff.
Five specific banks, BBVA, Banco Santander, Deutsche Bank, BZ Bank and UniCredit, have benefitted massively from the system.
Spanish bank BBVA, who has fewer than 15 employees in Malta, has made over €100 million in profit every year since 2017, making a total of €440 million since 2016. However, they have only paid €26 million in income tax at a rate of less than 6%.
German behemoth Deutsche Bank managed to rake in €418 million profit between 2015 and 2019, paying just 4.5% in tax. That’s roughly eight times less than the income tax rate in Malta.
Malta currently has a tax rate of 35% on declared profits. However, the country’s controversial tax rebate system for resident companies allows banks to get a refund of 68.9%.
Still, from 2015 to 2019, ghost banks paid a total effective corporate tax rate of only 9 per cent on their profits in Malta – almost four times lower than Malta’s official tax rate.
Transparency International estimates that ghost banks generated €590 million in Malta between 2015 and 2019 – a number comparable to the total volume of all profits made in Slovenia during the same period.
“It only takes one tax planning department for a multinational firm to reshuffle its profits, so the money earned in Italy or Germany appears under the accounts of Malta or Saudi Arabia.”
“Subsidising large corporations without any regard for their tax behaviour and structure might easily end up as an investment that will never contribute to the country whose taxpayer pays their bills,” Transparency International said.
Transparency International’s analysis covers a wide range of banks and jurisdictions, raising major questions on the industry as a whole.
At least 32 out of 39 banks have substantial operations in low-tax EU jurisdictions, with Ireland, Luxembourg and Malta the most lucrative destinations. Meanwhile, at least 29 out of 39 banks declare high profits in jurisdictions where they do not employ anyone, suggesting widespread profit shifting.
You can read the full report over here.
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