Dutch authorities are imposing a financial fine on Morgan Stanley after completing a long-term investigation into the bank’s handling of dividend tax.
According to the Dutch Public Prosecution Service, two Morgan Stanley entities in London and Amsterdam are facing criminal orders related to a dividend tax structure used between 2007 and 2012.
The Dutch Public Prosecution Service states that Morgan Stanley established a Dutch subsidiary in 2006 under the name Morgan Stanley Derivative Products (Netherlands) BV, or MSDPN.
Researchers say MSDPN acquired Dutch listed shares for short periods around dividend dates and lent them out between those dates. During those short ownership periods, the shares generated approximately €830 million in dividends.
MSDPN subsequently settled €124 million in dividend tax on five corporate tax returns filed between 2009 and 2013.
According to the authorities, on average 90% of the dividends are via Morgan Stanley & Co. International Plc flew abroad to financial institutions that are not eligible for dividend tax compensation.
The fines, totaling €101 million, are in addition to the tax and interest that the bank already pays to the tax authorities at the end of 2024.
The tax authorities first mapped out the transactions at the end of 2010, which led to audits and years of tax lawsuits. Additional fact-finding by the FIOD (Dutch Fiscal Intelligence and Investigation Service) revealed what prosecutors describe as a closed circular structure used to pass on dividends and tax credits.
Just before the start of the criminal proceedings, the bank agrees to accept the €101 million fines through subpoenas to the two entities involved. Prosecutors say this confirms the companies’ guilt.
The agency believes the injunctions are appropriate because a judge in criminal proceedings could only impose a fine on legal entities.
Follow us on X, Facebook and Telegram
Don’t miss a beat – Subscribe to receive email alerts straight to your inbox
Check price action
Surf to the Daily Hodl mix
Generated image: Midjourney