France’s tax authority is seeking €2.5 billion ($2.7 billion) in back taxes from French banks over their roles in a dividend arbitrage strategy known as “Cum-Cum,” according to Budget Minister Gabriel Attal.
(Bloomberg) — France’s tax authority is seeking €2.5 billion ($2.7 billion) in back taxes from French banks over their roles in a dividend arbitrage strategy known as “Cum-Cum,” according to Budget Minister Gabriel Attal.
Attal made the comment in a Senate hearing on May 2, though it went unreported until Le Monde published an article on Monday, citing the statements. A spokesman for Attal’s office confirmed the figure.
Paris prosecutors raided the offices of BNP Paribas SA, its unit Exane, Societe Generale SA, Natixis SA and HSBC Holdings Plc in March as part of a probe into the trades, in which shareholders transferred stock for a short period to investors based abroad to avoid paying tax on dividends.
Following the raids, the French banking lobby Federation Bancaire Francaise filed a lawsuit to try to force tax authorities to clarify which dividend arbitrage strategies require the payment of taxes.
Unlike its peers, Credit Agricole SA reached a settlement with French authorities to avoid being dragged into a criminal probe.
In Cum-Cum trades, investors who received shares from original holders typically held them during the period when dividends were paid out and either weren’t taxed or taxes were refunded. They then returned the securities and the amount saved was split between the parties.
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