The Public Prosecution Service (OM) has imposed a penalty order in the form of a fine for evading dividend tax in the Netherlands on a former employee of a foreign pension fund. The 57-year-old man is to pay a maximum fine of 486,000 euros. According to the OM, he was involved, in his capacity as an employee, in the evasion of dividend tax by the foreign pension fund.
Evading dividend tax
The foreign pension fund has claimed a refund of over 200 million euros in dividend tax from the Tax and Customs Administration. The transactions took place between 2013 and 2018. According to the Public Prosecution Service, the foreign pension fund was not entitled to a refund of dividend tax because it was not the ultimate beneficial owner of the dividends it received.
Trading strategy
The former employee was involved as a trader in the execution of transactions in shares of Dutch listed companies on behalf of the foreign pension fund. In these transactions, the shares were purchased through banks shortly before dividends were paid out on those shares. According to the Public Prosecution Service, the reclaimed dividend tax was subsequently distributed between the foreign pension fund and the banks through the conclusion of a derivative.
Fine
According to the Public Prosecution Service, the former employee knowingly accepted the significant risk that the refund claims submitted by the pension fund to the Tax and Customs Administration were incorrect. Given the substantial tax loss and the number of refund claims submitted by the pension fund, the Public Prosecution Service has decided to impose maximum fines for each (bundled) refund claim.
Personal circumstances
The Public Prosecution Service takes into account the fact that the former employee held an operational role, that he was not in a position to initiate or approve the trading strategy, and that he bore no ultimate responsibility for tax matters within the pension fund. Furthermore, the investigation did not reveal that he personally profited from the application of this strategy. The personal circumstances of the former employee, who resides abroad, also lead the Public Prosecution Service to consider a punishment order appropriate. By issuing the punishment order, the Public Prosecution Service determines the guilt of the former employee with respect to the prohibited conduct. The former employee has decided to waive his right to object.
The imposition of this punishment order brings the prosecution of the former employee to an end. The prosecution of the foreign pension fund is still ongoing.