OECD report on dividend tax fraud

The OECD has, on 7 December 2023, published a report on dividend tax fraud, following the sixth OECD Forum on Tax and Crime held in Rome, Italy, between 5–7 December 2023.

Among the topics of discussion, certain priority areas for further action were identified, among others: 

• the increase of sharing and pooling of knowledge, including with other international partners; and

• the development of new mechanisms for more systematic real-time co-operation and sharing of information, including the piloting of a new confidential network of tax crime law enforcement authorities

The published report on dividend tax fraud aims to raise awareness of so-called dividend stripping schemes, which are “a type of fraud that is committed through a complex mechanism of trading, selling and repurchasing shares over a certain period to unlawfully avoid payment of dividend taxes, or to claim unjustified tax reimbursements”. Due to its complexity and transactions involving several jurisdictions, dividend stripping schemes can be difficult to recognise and provide special challenges for the tax authorities. Among these schemes are the schemes referred to as “cum-ex” and “cum-cum”, which have been identified as being used in the largest tax fraud scandal in EU history, costing Member States approx. EUR 140 billion.

The report recommends that countries prepare actions and strategies to combat these types of dividend stripping schemes, including the tax authorities and law enforcement, but also other types of governmental competent authorities. Information sharing is noted as crucial for future dividend stripping investigations.

In Sweden, discussions have been ongoing for long to implement a new law on withholding tax, including a general anti-tax avoidance rule. However, the preparatory work has been put on hold while waiting for the so-called FASTER Directive.