Bloomberg: Five French banks to be fined €1bn for tax evasion

French banks Societe Generale, BNP Paribas and its subsidiary Exane, as well as HSBC, Natixis and BNP will be fined a total of €1 billion as part of an investigation into tax fraud and money laundering related to the payment of dividends. Today, March 28, in these banks passed searches. This was reported Bloomberg.

The raids are linked to a dividend arbitrage strategy known as cum-cum, in which shareholders did not temporarily transfer shares to investors located abroad in order to avoid paying tax on dividends. Investors held shares at a time when the dividends paid were either tax-free or offset. They then sold the securities back to the original owner. The amount thus saved was divided.

The French police are investigating jointly with Germany. It involves 16 French judges and 150 investigators, as well as 6 prosecutors from Cologne. This is due to the fact that a similar scheme was common in Germany, known as cum-Ex. It allowed sellers and beneficial owners of shares to claim tax breaks on dividends paid only once.

A trader in a cum-ex lawsuit in 2019 reported that the scheme was five to six times more profitable than cum-cum. However, the cum-cum scheme was more common, especially in interbank trading, since the legal risks associated with its use were lower. As part of the investigation into the cum-ex scheme, civil and criminal cases were initiated in Germany, the UK and Denmark.

Anastasia Larina