Suspicions of tax fraud: the French banking federation asks the Council of State

Europe 1 with AFP 18:18 p.m., March 30, 2023, modified at 18:18 p.m., March 30, 2023

The French Banking Federation (FBF) announced Thursday that it has filed an appeal with the Council of State against the position of the tax administration on the taxation of dividends for foreign holders of shares in listed French companies, at the heart of the scheme called 'CumCum'. "We filed an appeal with the Council of State today," an FBF spokesman told AFP, confirming information from the Bloomberg financial agency.

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Have a "clear and coherent" legal framework

The aim is to have a "clear and coherent" legal framework on the subject, two days after searches in five major banks in France suspected of having participated in this tax scheme. Presented as "a subject of controversy between banking institutions and the tax administration (...) for several years", the intermediary role of five banks in the taxation in France of dividends from shares of French companies is the subject of several investigations opened in mid-December 2021 by the National Financial Prosecutor's Office (PNF).

They led Tuesday morning to an operation of unprecedented scale, mobilizing 16 magistrates (out of 19 in office) of the PNF, 150 investigators (out of more than 250 in office) of the judicial investigation service of finances (SEJF), as well as six German prosecutors of the Cologne prosecutor's office. Five financial institutions are targeted: BNP Paribas, Exane (fund manager, subsidiary of BNP), Société Générale, Natixis and HSBC.

Total tax adjustments exceed one billion euros

A source close to the file indicated Tuesday to AFP that the total amount of tax adjustments for these five banks exceeded "only" the billion euros. If it arrives the day after the searches, the filing of this appeal "for excess of power" is "completely independent of the ongoing judicial proceedings," says the FBF, which does not comment further on this subject. The professional federation explains that it has been waiting a long time for the position of the tax administration on the subject, which was reflected on February 15 by three publications in the BOFIP (Official Bulletin of Public Finance).

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"In the absence of having had a response in line with the existing legislative framework, and after detailed examination of the situation", the FBF "opted for an appeal to the Council of State, so that the judge can 'say the law' in the matter and thus an operative and legally certain device can be applied by all market players", she explains.