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DECRYPTION – The national financial prosecutor’s office searched these establishments, including BNP Paribas, Société Générale and HSBC, suspected of having allowed foreign investors to escape the tax on dividends.
The period is decidedly complicated for the banks. In France, five large establishments were searched on Tuesday, as part of investigations opened by the National Financial Prosecutor’s Office (PNF) on suspicion of “aggravated money laundering, aggravated tax evasion” and “aggravated tax evasion”. An extraordinary operation , “ most important in the history of the PNF”.
BNP Paribas, Société Générale, Exane (management company, subsidiary of BNP Paribas), Natixis (BPCE group) and HSBC are suspected of having set up complex financial arrangements, called “CumCum”, to allow foreign investors to to escape the tax on dividends from shares of listed French companies. Concretely, the process consists for a non-resident in temporarily transferring the legal ownership of his securities to a tricolor bank, “around the date of the dividend payment”explains the PNF in a press release, confirming the information of the newspaper THE World.
As banking institutions are domiciled in France, they do not pay tax on the dividend received. The tax gain can then be shared between the bank and the investor (individual or most often fund manager). And the latter recovers its titles with the dividends after the operation. On Tuesday, only Société Générale and BNP Paribas acknowledged that their premises were being searched. The latter did not wish “comment on an instruction in progress”. The other establishments did not react.
Practices identified in 2017
The five searches were still in progress at the end of the day and they were to extend into the night. The public authorities mobilized considerable resources for this purpose: the operations were carried out by no less than 16 magistrates from the financial prosecutor’s office (out of 19 in office), 150 investigators (out of a total of 250) from the (SEJF), attached to Bercy, as well as six German prosecutors from the Cologne prosecutor’s office.
In France, practices for circumventing the tax on dividends were identified in 2017 by the tax administration. Seven procedures were launched between 2017 and 2019 against French banks, explained, during a hearing in the Senate, Frédéric Iannucci, the head of the legal security and tax control department at the Directorate General of Public Finances. (DGFiP). Only one bank had “acknowledged and accepted a rectification”. The tax administration then entrusted the file to the PNF, which opened five criminal investigations in December 2021.
BNP Paribas and Exane were targeted respectively by a mandatory denunciation and a complaint from the tax authorities (DGFiP), allowing prosecution for tax evasion. The other three banks have not been the subject of such a denunciation, but are part of the establishments targeted at the end of 2018 by a complaint filed by a collective, Citizens in organized band, around the boss of the PS deputies, Boris Vallaud. On Twitter, the latter “bliss” Tuesday of the PNF investigation after a complaint that “is finally bearing fruit”.
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Tax adjustment of more than 1 billion incurred
The vast majority of the incriminated establishments have always disputed any irregularity in the case, recalling their contribution to tax in France. From now on, the five establishments in the crosshairs of justice incur a total of more than 1 billion euros (or even 1.5 billion) in tax adjustment. They could also receive a criminal fine for “aggravated laundering of aggravated tax evasion”, which, in certain cases, could represent“up to 50% of evaded tax”indicates a source close to the case.
Secondly, it is not excluded that those responsible for these financial arrangements, assimilated to “tax evasion”, or shareholders who have benefited from them, are also implicated, as was the case in Germany. . Across the Rhine, dozens of people have been charged in a similar case called “Cum-Ex”, including bankers, traders, lawyers and financial advisers. And, in a March 2020 judgment, the Bonn court placed the “Cum-Ex” outside the scope of legality. As part of a legal “grey zone”, these tax optimization practices are now targeted by a growing number of jurisdictions on the Old Continent. The Netherlands thus opened a criminal investigation against ABN Amro in 2021. The bank has spent a provision of nearly 80 million euros to deal with the possible litigation.
A group of sixteen media revealed for the first time in 2018, via the “Cum-Ex Files”, suspicions of giant tax fraud. In 2021, they estimated the total amount of damage at 140 billion euros over twenty years.