Margaux Fodéré, edited by Romain Rouillard 06h18, March 29, 2023

On Tuesday, searches took place in the premises of several major French banks. BNP Paribas, HSBC, Société Générale and Natixis are suspected of having laundered aggravated tax fraud. At the heart of the suspicions: the practice of "CumCum" which has cost 33 billion euros in 20 years to the French State.

Several major French banking institutions are in the eye of the storm. Societe Generale, BNP Paribas or Natixis and HSBC are suspected of laundering aggravated tax fraud and were searched within their premises on Tuesday noon. A large-scale operation that mobilized 16 magistrates from the national financial prosecutor's office, 150 investigators from the judicial investigation service of finances (SEJF), as well as six German prosecutors from the Cologne prosecutor's office. At the heart of the investigations: the practice of "CumCum", responsible for 33 billion euros of loss of revenue for the French State over the last 20 years.

A "win-win" maneuver

To understand the ins and outs of this practice, imagine that an American owns shares in a company listed in France. Like all shareholders, he will receive dividends once a year. But as a foreign investor, he must pay a withholding tax of between 15 and 30% of the dividend. However, to escape it, this American can decide to lend his shares to a French bank - which pays little or no tax - just before receiving these dividends.

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Once their payment is completed, the bank can then return its shares to him and share with him the tax gain from the transaction. A maneuver, called in Latin "CumCum", implied "win-win" for the bank and the investor. But the game is dangerous because tax optimization can quickly turn into tax fraud. The investor is then exposed to tax sanctions, or even legal proceedings, just like the bank if the fraud is proven.