Escaping the exchange of information: Tax evasion via citizenship-by-investment

Dominika Langenmayr*, Lennard Zyska

*Corresponding author for this work

Publication: Scientific journalJournal articlepeer-review

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.

Original languageEnglish
Article number104865
JournalJournal of Public Economics
Volume221
DOIs
Publication statusPublished - May 2023

Bibliographical note

Publisher Copyright:
© 2023 The Author(s)

Keywords

  • Citizenship-by-investment programs
  • Tax evasion
  • Tax havens

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