International lender HSBC has agreed to pay 267.5 million euros ($312.33 million) to France’s treasury to settle an investigation into alleged dividend tax fraud, the French financial prosecutor’s office said on Thursday.
The inquiry was part of a wider probe into dividend tax practices that has implicated several banks in France, with similar investigations also carried out in Germany and other European countries.
The settlement, approved by a Paris court on Thursday, brings to a close an investigation covering activities between 2014 and 2019. Prosecutors said their case focused on trading structures involving intra-group dividend arbitrage transactions, which they alleged could amount to tax fraud. The agreement does not constitute an admission of wrongdoing by HSBC.
In a statement, HSBC said it was “pleased to have resolved this matter, which relates to certain historical trading activity that ended in 2019.”
“The settlement recognises the bank’s cooperation with the investigation, as well as the corrective actions taken to address these historic issues,” HSBC added.
The bank did not disclose whether it had set aside provisions for the payment or what impact the settlement might have on its financial results.
The broader investigation into HSBC and other banks initially stemmed from scrutiny of so-called cum-ex dividend stripping, a practice in which shares are rapidly traded around dividend payment dates. However, prosecutors clarified that HSBC’s settlement relates specifically to dividend arbitrage transactions, not cum-ex trades.
Cum-ex schemes were designed to obscure share ownership and enable multiple parties to unlawfully claim tax refunds on the same dividend payments. These practices have triggered major investigations and prosecutions across Europe.
In Germany, a court in 2022 sentenced tax lawyer Hanno Berger to eight years in prison for allegedly orchestrating one of the country’s largest post-war frauds through dividend-stripping schemes, which some estimates say cost German taxpayers around 10 billion euros.
