The European Banking Authority (EBA) published on Tuesday 12 May its preliminary conclusions on tax optimisation practices revealed by the ‘Cum-Ex Files’ scandal, as requested by the European Parliament in a resolution of 2018 (see EUROPE 12149/3).
‘Cum-Ex’ dividend arbitrage strategies allow, through rapid share transfers, to be reimbursed several times with tax paid only once. In the ‘Cum-Ex Files’ case, European banks were able to evade tax on share dividends in excess of 55 billion euros over 15 years in 11 Member States.
The EBA report, based on the responses of the competent national authorities to questionnaires, shows that they do not share the “same understanding” of these strategies and the extent to which the processing by financial institutions of the proceeds of these schemes may constitute money laundering. Indeed, dividend arbitrage schemes are not always regarded as tax offences in all Member States.
The report also reveals that the competent authorities that have taken action have done so largely in response to money laundering or governance risks that had already crystallised. Few seem to have examined whether there is a link between tax offences, money laundering and governance failures, it says.
For MEP Sven Giegold (Greens/EFA, Germany) the report is “embarrassing”, “poor quality” and above all does not answer Parliament’s questions at all.
“In view of the failure to clear up the dividend arbitrage scandal, an upgrade of the EBA to a European money laundering supervisor has become unthinkable”, he said in a statement, referring to the Commission’s proposal for a European supervisor in 2021 (see EUROPE 12482/8).
A ten-point action plan
On the same day, the EBA presented a ten-point action plan to strengthen its anti-money laundering framework against such systems.
In particular, it commits to revise several of its guidelines by 2021 to ensure that tax offences are better taken into account.
Like the European Securities and Markets Authority (see EUROPE 12288/11), it also announced that it would launch a "formal investigation", as requested by Parliament, to verify the measures taken by financial institutions and national authorities following its recommendations, though without announcing a date.
See the report: https://bit.ly/2SYmJ1Y and the action plan: https://bit.ly/2LocJL6 (Original version in French by Marion Fontana)