Morgan Stanley has agreed to pay €101 million in fines imposed by the Dutch Public Prosecutor’s Office over what authorities described as dividend tax evasion linked to so‑called Cum‑Cum trades conducted more than a decade ago.

The Dutch prosecutor said two Morgan Stanley entities in London and Amsterdam facilitated structures that enabled parties “who were not entitled to a dividend tax offset or refund” to benefit improperly. According to the prosecutor, a Dutch subsidiary, Morgan Stanley Derivative Products Netherlands, briefly held Dutch shares around dividend dates between 2007 and 2012 and received €830 million in dividends, then offset €124 million of dividend withholding tax across five corporate tax returns filed between 2009 and 2013.

Under Dutch law, domestic recipients of dividends may reclaim or offset dividend tax if they are the ultimate beneficiaries, while foreign recipients generally cannot. The prosecutor concluded the bank “engaged in dividend tax evasion and intentionally filed false tax returns,” adding that the penalty orders are close to the statutory maximum and are separate from tax and interest the bank settled with the Dutch Tax Administration at the end of 2024.

A Morgan Stanley spokesperson said the bank is “pleased to have resolved this historical matter, which related to corporate tax returns filed in the Netherlands over 12 years ago,” noting the firm had previously rejected the allegations. The Dutch authority said the bank accepted the fines shortly before criminal proceedings were due to begin.

In a statement, the Dutch Public Prosecution Service said Morgan Stanley “through a specially designed structure, ensured that parties who were not entitled to a dividend tax offset or refund could still wrongly benefit from a portion of the offset dividend tax.” The service also detailed that dividends flowed via the London office to underlying institutions not eligible for compensation.

The case forms part of a wider European focus on Cum‑Cum transactions, in which foreign stock owners lend shares to tax‑exempt local entities over dividend dates to avoid withholding taxes. Bloomberg reported that French prosecutors have launched a criminal probe into BNP Paribas SA, HSBC Holdings Plc’s local unit, Societe Generale SA and Natixis SA, while French tax officials are pursuing civil recoveries. Morgan Stanley’s settlement closes the Dutch criminal matter, according to the prosecutor.

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