Dividend Stripping

The Verboten Financial Striptease

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A thumb drive with bank account details is tying 129 big banks and financial institutions to an illegal dividend-stripping investigation in Germany.
  • Why it matters

    Why it matters

    German investigators say they are closing in on illegal dividend-stripping business by 129 banks, including Deutsche Bank, Goldman Sachs, UBS and Barclays.

  • Facts

    Facts

    • Tax authorities in the state of North Rhine-Westphalia bought a USB for €5 million last September from a bank insider that has fueled their investigation.
    • The thumb drive has account details on dividend-stripping at 129 banks, including some of the biggest in the world.
    • The northwestern German state has been one of the most aggressive at pursuing dividend strippers, returning €2 billion in lost revenue to taxpayers.
  • Audio

    Audio

  • Pdf

The list of international suspects is illustrious: Deutsche Bank in Frankfurt, Barclays of London, BNP Paribas in Paris, Goldman Sachs in New York, UBS in Zürich. These are just a few of the 129 financial institutions implicated in wholesale tax manipulation in share dealing between 2007 and 2012, Handelsblatt has learned.

The companies are accused of lowering capital-gains taxes by manipulating shareholdings around dividend payment dates. Insiders say dividend stripping may have cost the German taxpayer about €700 million (about $750 million) in dishonestly acquired tax reimbursements. A bank heist on a huge scale, they say, but with the banks as perpetrators rather than victims.

Tax investigators in the industrial city of Wuppertal in western Germany believe they have all the evidence they need to put a definitive end to a lucrative tax dodge going back almost 20 years. In September of last year, the state government of North Rhine-Westphalia paid €5 million ($5.4 million) for a USB stick containing years’ worth of detailed information about banks’ and their clients’ dividend stripping.

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