The Public Prosecution Service (OM) has imposed a penalty on ABN AMRO Bank N.V. (ABN AMRO) in the form of a fine of 14 million euros. The OM accuses ABN AMRO of being complicit in the deliberate submission of incorrect tax returns by another bank, which unlawfully offset dividend tax.
Unlawful Offsetting
Investigations by the FIOD under the direction of the OM show that a Dutch subsidiary of a foreign bank submitted five corporate tax returns between 2009 and 2013. In those returns, a total of 124 million euros in dividend tax was offset. According to the OM, these returns were deliberately submitted incorrectly. The offset amount of dividend tax is related to a total of 825 million euros in dividends paid on Dutch listed shares.
The shares were parked risk-free in the Netherlands just before the dividend payment, at a subsidiary of the foreign bank. In general, a Dutch company can offset dividend tax as long as it is the ultimate beneficiary under the law. However, in this case, after collecting the dividend, the shares along with the dividend were almost immediately returned abroad.
By acting this way, the subsidiary was not legally considered an ultimate beneficiary according to the OM. Therefore, the subsidiary also had no right to offset dividend tax in its tax returns. By offsetting anyway, the OM states that 124 million euros in dividend tax was evaded.
Fine for Complicity
ABN AMRO had no involvement with the tax returns. It was the subsidiary of the other bank that offset the dividend tax. However, periodic stock and derivatives transactions with (legal predecessors of) ABN AMRO were part of the transaction structure of the foreign bank. As a result, the subsidiary of this foreign bank wrongly offset dividend tax according to the OM. The OM considers ABN AMRO complicit in the deliberate submission of incorrect tax returns from mid-2010 to mid-2013. As part of an out-of-court settlement, the OM therefore imposes a penalty of 14 million euros on ABN AMRO. In determining the amount of the fine, consideration was given to the gross revenues from the transactions entered into by (legal predecessors of) ABN AMRO, the cooperation provided by ABN AMRO during the investigation, and the fact that these are older offenses.
Follow-up
This penalty concludes the criminal investigation for ABN AMRO.