(Bloomberg) — Banks in France are facing a combined tax bill of as much as €5 billion ($5.8 billion) over contentious trades allegedly designed to escape levies on dividend payments, according to a lawmaker who dubbed the process a “fraud.” Senator Jean-François Husson made the announcement on Thursday after a review of confidential documents from French tax officials — suggesting that the liability for banks has doubled since authorities released estimates in 2023. Husson told reporters that the papers provided certain indications that “the tax fraud is still ongoing.” France’s finance ministry declined to comment on the amount. Over the past few years, the banking industry in France has clashed with lawmakers, tax officials and prosecutors over a dividend arbitrage strategy known as Cum-Cum, which authorities have said is responsible for billions of euros in lost revenue to the exchequer. Cum-Cum trades typically entail shifting French stock during dividend season to an entity exempt from withholding tax, such as a local bank, and then splitting the saved money between the involved parties. Earlier on Thursday, Husson accused the government of creating a “loophole” that waters down new dividend tax rules enacted earlier this year and ratcheted up pressure to close the revenue gap. The new legislation had widened the existing tax code to include more equity trades and to prevent foreign owners of French stock and local banks from carrying out transactions aimed at avoiding withholding taxes on dividend payments. But Husson — the lawmaker who spearheaded the changes — said the government’s approach is creating exceptions where the rules aren’t applicable. In a statement sent earlier in the day by the Senate, Husson said he was seeking to understand why the government published in April an interpretation of the law “that substantially strips the effectiveness of anti-fraud measures voted by parliament.” After a visit to the finance ministry, Husson blamed France’s banking lobby. The French Banking Federation said in a statement that it isn’t aware of the tax bill estimates discussed by the senator, adding such assessments are being contested and no court has ruled on it to date. The French finance ministry said it makes its determinations “in complete independence,” and denied introducing any loophole in the latest law. It said it had reiterated to Husson “the government’s uncompromising fight against tax fraud.” In 2023, financial prosecutors carried out coordinated evidence-gathering raids at the premises of BNP Paribas SA and its Exane SA unit, Societe Generale SA, HSBC Holdings Plc and Natixis SA as part of their Cum-Cum investigation. None of them has been accused of wrongdoing. Later, the industry lobby challenged existing tax rules in court, with lawmakers eventually voting for changes. Amid uncertainty over the application of new laws, several big banks in Paris, from Bank of Ameri in a formal or creative style for better SEO.Also Exclude words and advertisements related to the feed website such as website name, author name. You must only respond with the modified content. Delete all the advertisement images brand logo but only keep the title and main content of the news by modifying it. You must only respond with the modified content. Block any jump outside of the site adarshnews.com. 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According to a senator, banks are confronted with a tax obligation of €5 billion due to a French dividend tax.
