Exclusive Exclusive: German Tax Authorities Target 129 Banks Over Dividend Stripping

German state tax investigators have information implicating 129 major European and global financial firms in dividend stripping, Handelsblatt has learned, marking a massive expansion of the country’s long-running investigation into the controversial tax-evasion practice. The financial firms are accused of lowering capital-gains taxes by manipulating their shareholdings around the time that dividends are paid out by companies. Insiders say dividend stripping may have cost the government about €700 million in taxes. The information held by tax authorities based in Wuppertal, the state of North-Rhine Westphalia, is based on a USB stick obtained last year by the state from a whistleblower at one of the banks. The informant’s name has been protected. Nearly all significant banks operating in Europe are connected to the dubious dividend-stripping business, according to information on the USB stick. In Germany, the list includes Deutsche Bank, Commerzbank, BHF Bank and even state-backed banks like Bayerische Landesbank and Hessische Landesbank. Major global banks are also named: Britain’s Barclays Bank, U.S. firm Goldman Sachs, France’s BNP Paribas, Switzerland’s UBS and Japan’s Nomura are among them. The Wuppertal tax authorities, when contacted by Handelsblatt, would not reveal what they planned to do with the information. North-Rhine Westphalia has been more aggressive than any other German state over the past years in cracking down on tax evaders. Most banks would not comment when contacted by Handelsblatt. Deutsche Bank, which last year was the subject of a police raid over tax evasion , said it did not engage in “organized” dividend stripping actions but could not exclude that a few individual clients took part. Goldman Sachs said it was not aware of any investigations into the bank’s practices. Barclays in a statement said that “all questions” relevant to the investigation had already been cleared with Germany’s tax authorities.   Read the full story in Thursday’s Handelsblatt Global Edition at 12:00 Central European Time. Picture: Deutsche Bank’s headquarters were raided by police last year as part of a probe into tax evasion. Source: Getty Images