6 months Ago
ABN Amro, which had a supporting role in the scheme, meanwhile, has put to rest the case with Dutch authorities by paying a €14 million fine.
Tax Avoidance by Abusing Dividend Offsets
The Public Prosecution Service (OM) said an affiliate of Morgan Stanley had illegally received dividend tax offsets that the company was only temporarily entitled to. According to Dutch law, tax reclaimed in these kind of situations can only be claimed by the end-beneficiary of shares. In this instance, shares were said to have been moved overseas soon after dividends were paid, indicating the bank never truly owned the stock beneficially.
Although the €124 million in taxes plus interest have already been paid to the Dutch tax office, Morgan Stanley is still under investigation for criminal liability. A hearing in an initial court case is due by the end of this year.
ABN Amro's Role and Settlement
ABN Amro did not file the fraudulent tax refunds, but, according to OM, was involved through derivatives and share transactions which made the scheme possible. The trades were executed by ABN Amro and its predecessor, Fortis, which was absorbed by ABN Amro in the 2008 financial crisis.
The OM pointed out that it concerned a scheme with a dividend payment of €825 million and that the false filings were made "deliberately". ABN Amro's fine of €14 million formed part of a settlement, concluding the investigation against the bank.
When deciding the penalty, prosecutors took into account the bank's cooperation, how old the case was and the profits the bank had made on the transactions.
ABN Amro was nationalized in 2008, but the Dutch State retains about a third of the bank. The government started selling its stake in 2015, just after the bank was listed on Euronext Amsterdam.
