Between 2000 and 2020, the Dutch treasury may have lost 27 billion euros in dividend tax. The Dutch government and other European governments have been defrauded or duped for a total of 150 billion euros by bankers, traders and hedge funds. Through complicated constructions they either avoided dividend tax or were guilty of fraud.
This is evident from research by the University of Mannheim and the international journalistic collaboration project The CumEx-Files 2.0 led by the German non-profit research platform Correctiv, in which the Dutch Follow the Money (FTM) participates.
‘Developed financial markets’
The research collective previously calculated that between 2001 and 2016 the damage amounted to 55.2 billion euros. The new calculations therefore come to a total of 150 billion euros in lost dividend tax. In addition to the Netherlands, France (33 billion euros) and Germany (28.5 billion euros) also missed out on enormous amounts.
Eric Smit, researcher and editor-in-chief of FTM: “In the Netherlands there are large stock exchange funds, which are for the most part owned by foreign owners. In combination with our well-developed financial markets, this lends itself very well to this type of fraudulent construction. “
The fraudsters and evaders use dividend strips for this. This means that parties reclaim dividend tax in various ways, while they are not entitled to it. According to FTM, fraudsters have spent years rigging strategies to make this possible.
CumEx and CumCum are two forms of dividend stripping. With CumEx, dividends are reclaimed that have not even been paid, or dividend tax is reclaimed multiple times when it has only been paid once. CumCum occurs when a shareholder has paid dividend tax, is not entitled to a refund and has another party collect the refund through a construction.
Smit: “The essence of CumCum is that foreign shareholders are not entitled to a refund of dividend tax amounting to 15 percent, but they can temporarily lend their share to a Dutch person who can reclaim the dividend tax on their behalf. the Dutchman, who returns it together with the borrowed share to the foreign shareholder.”
CumEx was made impossible in the Netherlands due to a change in the law in 2007. CumCum is still possible. Only in the United States and Switzerland is this not the case due to government intervention.
Follow the Money also sent the calculations to the Ministry of Finance. A spokesperson for the ministry told the platform the following: “We appreciate the attempts to gain more insight into this subject, but we cannot express an opinion on the share of the Netherlands in the estimates made. The Tax and Customs Administration does not use models to assess the possible damage in this area. Our statements are based on observations in incidental cases.”
In September, FTM revealed that the Public Prosecution Service is investigating the American investment bank Morgan Stanley in connection with dividend stripping. At the presentation of the annual figures this year, ABN Amro announced that the bank is suspected of involvement in fraud related to share transactions related to dividend strips. The Public Prosecution Service is also investigating this.
‘The Netherlands missed out on 27 billion euros in dividend tax between 2000 and 2020’
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