CAC40: The True Annual Report

17,000 Subsidiaries, 15% Based in Tax Havens

According to available data, companies on the CAC 40 have more than 17,000 subsidiaries worldwide. Approximately 36% of these are based in France, while 15% are registered in what are considered to be tax havens or secret jurisdictions, It can be tricky, however, to define what is and what isn’t a tax haven.

Knowing where a company’s subsidiaries are registered is a way to get a better idea of where a company is based. It’s also a way to identify subsidiaries registered in countries or regions with favourable tax rules or laws, which might be used to evade tax obligations or hide dubious practices.

Companies on the CAC40 vary greatly when it comes to disclosing subsidiaries. Companies such as Engie, Orange, Vinci and LVMH provide an exhaustive list of several hundred subsidiaries around the world, but without the relevant financial data or number of employees). Banks, which are legally required to disclose all this information, are also very comprehensive. Other companies, such as Legrand, Thales and ArcelorMittal, only provide very limited details on no more than thirty or so companies, making it difficult to know much about them.

According to available data, in 2019, a total of 17,000 subsidiaries were owned by CAC40 companies. Just over 6,000 of these were registered in France (36%). Unsurprisingly, the USA, the United Kingdom and Germany are home to most CAC40 subsidiaries. Major French corporations are based primarily in neighbouring countries (Spain and Italy) and in the world’s largest economies (China and Brazil), as well as in a number of smaller countries renowned for favourable tax regimes, such as the Netherlands and Luxembourg.

What is a “tax haven”?

A tax haven is defined as: “a jurisdiction that seeks to attract multinational companies by offering facilities that enable them to escape or undermine the tax laws, rules and regulations of other jurisdictions, reducing their tax payments in these jurisdictions. This tax payment reduction result from tax base spillovers (shifting profits, tax avoidance) and/or strategic spillovers (race to the bottom effects which prompt jurisdictions to lower their tax rates or tax base in response).” [1]

There is a degree of ambiguity around many of the countries or regions deemed to be tax havens, as the subsidiaries based in these countries may be there for valid reasons, linked to their industrial or business operations, unrelated to tax benefits (such as The Netherlands and Belgium). However, the fact that these countries feature among those where most CAC40 subsidiaries are registered suggests that many companies are partial to these countries due to their favourable tax policies or laws. Other tax havens, such as Luxembourg, Hong Kong and Singapore, are offshore financial centres. And then there are the small countries that fit the classic profile of a tax haven. These include Monaco (45 CAC40 subsidiaries), Bermuda (28 subsidiaries), Jersey (22 subsidiaries) and the Cayman Islands (14).

Three different lists may be used to assess the number of CAC40 subsidiaries based in tax havens.

The first is the French government’s official list of tax havens. This is a very limited list and only includes thirteen countries and jurisdictions that fit the traditional tax haven profile: Anguilla, the Bahamas, Fiji, Guam, the US Virgin Islands, the British Virgin Islands, Oman, Panama, Samoa America, Samoa, Seychelles, Trinidad and Tobago and Vanuatu. There are, however, still 72 CAC40 subsidiaries based in these jurisdictions, ie., 0.42% of all subsidiaries, a significant number of them being owned by Engie (18 subsidiaries) and LVMH (17 subsidiaries).

The second list, widely used by civil society, includes traditional tax havens, offshore financial centres and countries such as the Netherlands and Ireland. Approximately sixty jurisdictions are included in this last category. [2] Compiled in 2009 by the Tax Justice Network, this list is very revealing when it comes to identifying companies based in tax havens and secret jurisdictions. According to this index, approximately 15% of CAC40 subsidiaries are registered in tax havens.

A third list is the Tax Justice Network’s Financial Secrecy Index, which includes only the fifteen biggest contributors to financial secrecy. This list, which is more up to date than the one above, includes countries where many CAC40 companies are registered: the USA, Germany and the United Kingdom. About half of CAC40 subsidiaries based abroad fall into this category.

Therefore, according to the second list, the CAC40 companies that use tax havens the most are LVMH (over 27% of its subsidiaries), Axa (25%) and Michelin (24.2%). [3] In terms of numbers, companies with the most subsidiaries in tax havens are Engie (340 subsidiaries), LVMH (305), Vinci (236), le Crédit agricole (226), BNP Paribas (194), Total (168) and Société générale (146). These figures are, again, somewhat distorted. Engie and Vinci’s high degree of transparency compared to other companies should be taken into account. Both lists show that there is a strong presence of luxury brands and banks in tax havens.

This article in an excerpt, translated from the French, from Chapter 6 of "CAC40: le véritable bilan annuel 2020". More about this publication here. French original here.

[2Anguilla, Antigua and Barbuda, Netherlands Antilles, Aruba, Austria, Bahamas, Bahrain, Barbados, Belgium, Belize, Bermuda, Brunei, the City of London (UK), Cyprus, Costa Rica, Delaware (US), Dominica, United Arab Emirates (Dubai ), Gibraltar, Grenada, Guernsey, Hong Kong, Hungary, Isle of Man, Cayman Islands, Cook Islands, Marshall Islands, Turks and Caicos Islands, US Virgin Islands, British Virgin Islands, Ireland, Israel, Jersey, Jordan, Latvia, Lebanon, Liberia, Liechtenstein, Luxembourg, Macao, Malaysia (Labuan), Maldives, Malta, Mauritius, Monaco, Montserrat, Nauru, Niue, Panama, Netherlands, Philippines, Portugal (Madeira), Samoa, Seychelles, Singapore, St Kitts and Nevis, St Marino, St Vincent and the Grenadines, St Lucia, Switzerland, Uruguay, Vanuatu.

[3Excluding ArcelorMittal and Wordline, as these companies disclosed only a small number of subsidiaries.