Dutch Prosecutors Charge Morgan Stanley Over Tax Fraud

June 2025 – Dutch prosecutors have announced that they are bringing criminal charges against Morgan Stanley and one of its employees in connection with alleged dividend tax fraud amounting to €124 million. The charges relate to transactions said to have occurred between 2009 and 2013, during which Morgan Stanley’s Amsterdam-based subsidiary is alleged to have illegally received dividend tax credits.  In this instance, the shares were said to have been acquired just before ex-dividend dates and then repatriated overseas soon after dividends were paid, indicating the bank was never the true beneficial owners of the shares.

Dedspite Morgan Stanley repaying the €124 million in question, plus interest (total amount is rumoured to be close to €200m) to the Dutch tax authority in early 2025, the criminal investigation continued.  In a statement, the bank added: “Despite our full cooperation and the lack of clarity in the relevant tax legislation, the Prosecutor is basing this decision on an incomplete investigation and record, in violation of established process.”  Referring to Cum-Ex as a “complex, decade-old matter’’, Morgan Stanley stated that it rejects the Dutch prosecutor’s claims and will contest them “vigorously”. A preliminary court hearing is expected later this year.

Meanwhile ABN Amro, which according to the Dutch Public Prosecution Service (OM) facilitated aspects of the transaction structure through share and derivatives trading, paid an imposed fine of €14 million, bringing the investigation into its role to a close. The OM has stated that the trades in question related to dividend distributions totalling approximately €825 million and that the tax filings were submitted with the intention to deceive the Dutch Tax Authorities.

This case forms part of a broader effort across European jurisdictions to pursue enforcement actions in connection with dividend arbitrage schemes, including Cum-Ex and Cum-Cum transactions. Strategies that once operated in legal grey areas are now being re-evaluated under principles of economic substance and beneficial ownership.

For the financial and legal community, this serves as a clear signal: historic tax planning structures involving cross-border share trading may give rise to criminal exposure, particularly where they result in (now deemed) unlawful tax reclaims and where intermediaries are found to have enabled such outcomes.

At Objectivus, we are supporting clients in assessing past exposure, responding to investigations, and re-evaluating their approach to tax-driven trading. In this new era of scrutiny, it is probable that only strategies with demonstrable commercial rationale and clear alignment with updated legal standards will endure.