Offshore finance and corporate tax avoidance

Javier García-Bernardo

Location of profits

Location of employees

the Netherlands, Switzerland, Luxembourg, Ireland and Singapore

+5€ (coffee)

-1€ (brand)

-4€ (costs)

Starbucks Spain

Starbucks NL

EBT: 0€

EBT: 1€

+1€ (brand)

+5€ (coffee)

-4€ (costs)

Cafe Pepe

EBT: 1€

Tax: 0€

Profit: 0€

Tax: 0.07€

Profit: 0.93€

Tax: 0.25€

Profit: 0.75€

1. Which jurisdictions are OFCs?

3. to which extent do OFCs affect corporate tax rates?

2. how are OFCs used by MNCs?

Firms shift ~$800 billion to OFCs

Four perspectives:

  1. Corporate ownership networks
  2. Fragmentation of the firm
  3. Location of tax professionals
  4. Location of profits


Profit Centers

Mainly UK colonies


No taxation




Avoid legislation


Coordination Centers

Developed countries


Low tax on financial profits


Conduit to profit centers


Regional management


High-value adding operations


Increased profit shifting: <30%

Decrease in tax rates: >70%

3. to which extent to OFCs affect tax rates?

Corporate tax rates are decreasing

Why is this importanT?

Revenue losses

Economic efficiency AND EQUITY

corporate power


Policy making

Javier García-Bernardo




By Javier GB


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