Niels Johannesen får optaget forskningsartikel i Journal of Public Economics
The paper investigates how households with money on Swiss bank accounts responded to an EU reform aiming to curb tax evasion. Bank deposits in offshore financial centers may be used to evade taxes on interest income. A recent EU reform limits the scope for this type of tax evasion by introducing a withholding tax on interest income earned by EU households in Switzerland and several other offshore centers. We present evidence that Swiss bank deposits owned by EU residents declined by 30-40% relative to other Swiss bank deposits in two quarters immediately before and after the tax was introduced. We also present evidence suggesting that the drop in Swiss bank deposits was driven by behavioral responses aiming to escape the tax - such as the transfer of funds to bank accounts in other offshore centers and the transfer of formal ownership of Swiss bank accounts to offshore holding companies - rather than repatriation of funds.