NBER Working Paper 2024

Media coverage: Vox EU, Zetland 

Abstract: In the second half of the 2010s more than 100 countries—including all large offshore financial centers—started to automatically exchange bank information with foreign tax authorities. This informational big-bang marks a break with the situation of offshore bank secrecy that prevailed before. We study its effects on tax compliance by analyzing the universe of information reports sent by foreign banks to Danish authorities, matched to population- wide micro-data on income, wealth, and cross-border bank transfers. In response to the automatic exchange of bank information, tax evaders may repatriate previously undeclared offshore wealth, they may start to self-report offshore income to the tax authorities, or the tax authorities may detect their evasion in audits that use the new information reports. Using a variety of research designs, we find large compliance effects along all these margins, with the largest response coming from repatriation of wealth. Overall we estimate that the automatic exchange of bank information has closed about 70% of the offshore tax gap. These results highlight the power of international cooperation to improve tax compliance in a globalized world. 

Presentations: OECD JITSIC 2025, OECD Tax Gap Conference 2023, EU Tax Observatory Seminar, EPRN Conference 2022, OFS Workshop on Empirical Analysis of Tax Policy 2022, the IRS,  the Norwegian Tax Agency, the German tax agency, the Danish Tax Agency, the Danish Ministry of Taxation.

CEBI Working Paper 2024, EU Tax Observatory Working Paper 

Media coverage: Taxnotes, Cryptonews.com 

Abstract: Cryptocurrencies pose substantial challenges to tax enforcement due to their anonymous and decentralized properties, undermining conventional regulatory practices. We study the impact of an ambitious new enforcement initiative aimed at addressing these challenges: domestic third-party reporting of crypto income. We estimate tax compliance and behavioral responses to this new policy by combining unique Danish microdata from domestic crypto platforms, administrative tax records, and cross-border bank transfers. Despite the introduction of domestic third-party reporting, over 90% of crypto investors do not declare crypto income. Moreover, we identify a significant and persistent evasion response to the policy as investors shift trading activity from domestic platforms, subject to third-party reporting, to foreign platforms outside regulatory reach. Our findings underscore the limits of domestic enforcement strategies in addressing tax evasion for decentralized, borderless assets like cryptocurrencies, highlighting the need for international coordination.

Presentations: CESifo Public Economics Conference 2025, Oxford CBT Doctoral Conference 2024, IIPF 2024, The Danish Economic Society Congress 2024, CEBI Lunch Seminar, DGPE 2023, the Central Bank of Denmark, the Danish Tax Agency.

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