Germany is generally not considered a safe haven for people wishing to evade detection or taxation. However, according to a new ranking, the Federal Republic is actually one of the top 10 countries in the world that are complicit in helping people hide their wealth from the rule of law.
The Financial Secrecy Index 2022
Germany rose in the latest edition of the Tax Justice Network’s Financial Secrecy Index to claim seventh place in 2022, after falling to 14th in 2020. The annual index is a ranking of countries that conceal and facilitate the bank secrecy, public limited company and real estate ownership. , money laundering, tax evasion and evasion of sanctions.
Each country is assigned a score based on the extent to which each country’s financial and legal system allows individuals to hide and launder money from around the world. Scores are calculated based on the degree of financial secrecy allowed by banks and the government, and the volume of financial services the country provides to nonresidents.
The 2022 ranking, released ahead of a meeting of G7 finance ministers over sanctions against Russian oligarchs, calls on nations to ‘bring law and accountability to the billions of ‘lawless wealth’ secretly held overseas by wealthy individuals and accuses G7 countries of “undermining global transparency” with their tax and legal systems.
Germany drops in transparency law rankings
Germany moved up seven places from their 2020 result, landing again in the top 10 with an overall ranking of seventh. The main cause of Germany’s deteriorating score, according to the report’s authors, is the “disappointing implementation of new transparency laws” passed in 2020, requiring owners of companies, trusts and partnerships to record their information. The Tax Justice Network has accused Germany of being “dangerously short” in tackling the use of trusts to hide wealth and assets from the rule of law.
Restrictions in place since 2020 hampering public access to information and an increase in the volume of financial services it provides to non-residents have also pushed the Federal Republic back into the top 10.
US declared world’s most complicit country for aiding financial secrecy
This year’s ranking is dominated by the United States, which Switzerland beaten to be named the country most complicit in aiding financial secrecy, earning the worst rating ever in the history of the ranking. The Tax Justice Network said the development is “at odds with U.S. President Joe Biden’s commitments and efforts to combat global financial secrecy.”
“Globally, we are beginning to fight financial secrecy used by Russian oligarchs, as well as tax evaders, corrupt politicians and organized crime around the world to hide and launder ill-gotten wealth,” said Alex Cobham, Director General of Tax Réseau Justice. “But the US, UK, Germany, Italy and Japan have more than halved this global progress, fueling financial secrecy instead of fighting it.”
According to the 2022 Financial Secrecy Rankings, the world’s 10 worst nations for financial secrecy are:
- United States
- hong kong
- United Arab Emirates
- British Virgin Islands
For more information on the report, visit Tax Justice Network website.