PhD student: Mr D. Heymans

Promotor: F. Debelva

Duration: 1/9/2024 - 31/8/2028

Abstract:

The CumEx Files concern a form of fraud that came to light around 2011 after a whistleblower reported it to the German authorities. This involves the unlawful reclamation of taxes, causing many European treasuries, including Belgium's, to have lost billions. A web of banks, lawyers, stockbrokers, etc., applied the technique of cum- and ex-dividends, a form of double-dipping. The sector itself refers to it as dividend arbitrage, but a more accurate term is dividend stripping. Cum-cum fraud is a tax evasion practice where shares are sold just before the dividend is paid from a non-taxable party to a taxable party in the state where the company is based. The taxable party can then reclaim or offset the tax levied on the dividend in their income or corporate tax. After the dividend payment, the shares are repurchased, allowing the original owner to benefit from a tax refund they otherwise would not have received. The profit is usually shared among the involved parties. Much more complex is the technique of cum-ex fraud. Here, shares are traded between lawyers, banks, stockbrokers, shareholders, etc., creating deliberate confusion using various techniques such as intermediaries and short-selling about who held the shares at what time. This allows the tax to be unlawfully reclaimed multiple times. The technique is currently under thorough investigation. Procedures have already been initiated in several member states, leading to a number of convictions. In Belgium, someone was first convicted for cum-ex fraud in 2018. Several banks are also under scrutiny. However, many questions remain unanswered, such as which gaps in the legislation have not yet been closed, how regulators can better handle this issue, how the various European member states are responding to the phenomenon, and how large the actual damage is.