Taxation

There are two damages that we need to discuss.

One is about tax avoidance – well, more fraud than avoidance. That’s where the question: “why was this not discovered?” is really relevant.

The other dimension is, these trades around dividends, they’re easy to spot in the figures and nevertheless, neither the supervisory systems nor the ones who work in the field of trading and the stock exchanges blew in massive numbers the whistle. That is truly disturbing. This must be a part of the European investigation which is now set to come.

I have to say, I’m quite shocked with the lack of reaction from finance ministers and of the European Commission. When the consortium of European journalists,coordinated by the German non-profit investigative journalism centre Correctiv, published, there were very few statements. There is silence and I have to say that I’m very surprised that after such damage, there is not a clear agenda for action by the finance ministers belonging to the christian democrats, liberals and socialists.

Also the European commission hasn’t taken any action. I wrote immediately to the financial supervisors, ESMA and EBA, and received a very disappointing answer by ESMA and another one by EBA. I myself was the founding rapporteur of ESMA for the parliament and still they did not respond with “yes we will investigate” but they said “well it’s a tax matter, it’s not a financial service matter”, which I disagree profoundly with because their mandate is not about only prudence but it’s also about integrity – there is a clear reference in their mandate to integrity. And, clearly, if there’s a lot of trading happening in European stock markets around dividend day which is tax driven, that it is an integrity issue for the markets and not only a question for tax inspectors. This is something they have not accepted yet and I’m in robust discussion with them about it – I had a meeting Tuesday last week with ESMA chair Maijoor and he needs the help of the Parliament in the talks on ESMA’s legislative reform, but at the same time they refuse to take action on CUM EX. This shows the depth of the problem. ESMA is so far staying out of the fight against financial crime. It is a non-issue for ESMA, They admitted this in a public hearing before this scandal was published. And I think that it’s quite irresponsible. Now, the European parliament, also on our proposal, has voted a resolution which demands from ESMA and EBA to make a proper investigation. This call has gathered the support of a broad majority in Parliament. Now, the European supervisors have to act.

Answered by: Sven Giegold, MEP

Responsibility for the fiscal evaluation of tax optimisation models lies with the tax authorities. Nonetheless, breaches of tax law are also of interest to BaFin within the scope of its supervisory activities. Firstly, such breaches could present an operational risk and result in financial burdens. Secondly, banks are required to have in place adequate risk management in addition to internal safeguards designed to prevent criminal offences which might jeopardise the institution’s assets. We will continue to cooperate in full with the competent authorities should information become available that is of relevance under criminal law.

Answered by: BaFin