Wednesday, June 20, 2012

New data: Tiny tax haven is EU's biggest outside investor and inward recipient

Which European country was the largest investor in countries outside the 27-member European Union in 2011? Germany, with its $3.2 trillion GDP? France, with its $2.8 trillion?

No, the prize for largest outside investor by a long way, according to this news release from Eurostat, was . . . . the "Death Star" tax haven of Luxembourg, with a GDP less than one-fiftieth that of Germany's.

And the main European recipient of investments from outside of Europe? Germany again? No. Step forwards . . . . the Grand Duchy of Luxembourg.

Here, specifically, is what Eurostat says:
"Luxembourg, with investments of 110 bn euro, was the largest investor outside the EU27 in 2011, followed by the United Kingdom (89 bn), Germany (34 bn), France (21 bn), Spain (19 bn) and Belgium (16 bn).

Luxembourg (86 bn) was also the main recipient of investments from outside the EU27, ahead of Sweden (16 bn), Spain (15 bn), the United Kingdom (14 bn), France (12 bn) and Germany (11 bn). The role of Luxembourg in EU FDI is mainly explained by the importance of its financial intermediation activity."
Note the role of the UK too, (which attracts a lot of financial attention by virtue of its being a regulatory black hole.)

Read our fascinating history of the emergence of Luxembourg as a financial centre here.

There are plenty of statistics of this kind out there; note Tax Research's recent blog where he quotes a senior Chinese official who estimates that 73% of its foreign trade is with tax havens (that number includes Hong Kong, which is a tax haven.)

For those who read French, there is a fascinating analysis and discussion of this kind of data related to France by Christian Chavagneux at Alternatives Économiques, here.

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