Cross-Border Tax Evasion after the Common Reporting Standard: Game Over?

79 Pages Posted: 14 Sep 2018 Last revised: 17 Mar 2020

See all articles by Elisa Casi-Eberhard

Elisa Casi-Eberhard

Norwegian School of Economics (NHH) - Department of Business and Management Science

Christoph Spengel

Centre for European Economic Research (ZEW)

Barbara Stage

University of Mannheim; ZEW – Leibniz Centre for European Economic Research

Date Written: July 20, 2019

Abstract

Back in 2013, the Automatic Exchange of Information (AEOI) was endorsed as the prevailing universal solution to fight cross-border tax evasion. In this regard, the OECD launched a global standard for the AEOI, the Common Reporting Standard (CRS). Currently, around 100 jurisdictions have committed to implement it into respective national laws by 2018. In this study, we analyze the impact of the CRS on cross-border tax evasion using a difference-in-difference research design. By considering a period of four years (2014-2017), results suggest that the CRS induced a reduction of 14% in cross-border deposits parked in offshore locations for tax evasion purposes. Moreover, such wealth and related income has not been repatriated but rather a new location to avoid domestic tax obligations has emerged. More specifically, upon the CRS implementation at domestic level, the United States (U.S.), i.e. the only major economy in the world, which so far did not commit to the CRS, seems to emerge as a potentially attractive location for cross-border tax evasion.

Keywords: Tax Evasion, Automatic Exchange of Information, Offshore Locations, Cross-Border Deposits

JEL Classification: F42, G21, H26, H31

Suggested Citation

Casi-Eberhard, Elisa and Spengel, Christoph and Stage, Barbara, Cross-Border Tax Evasion after the Common Reporting Standard: Game Over? (July 20, 2019). ZEW - Centre for European Economic Research Discussion Paper No. 18-036, Available at SSRN: https://ssrn.com/abstract=3245144 or http://dx.doi.org/10.2139/ssrn.3245144

Elisa Casi-Eberhard

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Bergen, 5045
Norway

Christoph Spengel (Contact Author)

Centre for European Economic Research (ZEW) ( email )

D-68161 Mannheim
Germany

Barbara Stage

University of Mannheim ( email )

Schloss
D-68131 Mannheim
Germany

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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