The German Finance Ministry has indications that smaller banks, not just large institutions like Commerzbank, have also engaged in dividend-stripping to dodge taxes, according to information obtained by Handelsblatt.
In one concrete case, a large German bank lent domestic stocks, which were held by foreign investors, to a community bank. In documents obtained by Handelsblatt, the institution in question is named as Volksbank Rhine-Ruhr. The bank declined to comment.
Lending stocks is a method used to dodge taxes on capital gains. Commerzbank, Germany’s second-largest bank, most infamously used the method. The bank recently lost a suit seeking €75 million in a capital gains tax refund from dividend-stripping transactions.