SocGen, BNP among banks raided in France over tax fraud
France’s financial prosecutor is searching five banks including Societe Generale SA as part of a probe into tax fraud and money laundering related to dividend payments.
SocGen confirmed separately that it’s part of the probe. The French financial prosecutor’s office also confirmed by email that HSBC Holdings Plc, BNP Paribas SA, and Natixis are being searched.
The probe relates to so-called cum-cum transactions. Those involve a domestic bank taking over the shares of a company from a foreign investor shortly before the dividend is paid. That enables it to claim a tax break that the foreigner can’t get.
The investigation into loopholes used to reduce taxes on dividends has been an ongoing scandal in Germany. Prosecutors from that country are also part of the French investigation.
The probe involves more than 150 investigators and 6 German prosecutors from Cologne.
In Germany, so-called cum-ex transactions used loopholes in tax laws that allowed short-sellers and the actual holder of shares to all claim tax credits on a dividend that was only paid once.
The strategy made use of tax certificates issued by the banks involved as custodians in the trades. Germany eliminated the controversial rules in 2012.
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