Nordic Tax Delegates Annual Meeting in Stavanger on May 23, 2023

31 May 2023 10:54

Nordic Tax Delegates Annual Meeting in Stavanger on May 23, 2023

Once a year, the representative of the tax authorities from Denmark, Finland, Iceland, Norway and Sweden meet to discuss the latest on the taxation of dividend income. This year, they met in Stavanger on May 23, 2023 and for the first time they invited researchers for one day workshop around the topic of dividend tax arbitrage.

Dividend tax arbitrage is a widespread phenomenon. During a session at the European Parliament, Christoph Spengel, a professor of international tax at the University of Mannheim, described it as the "largest tax theft in European history." According to recent estimate by Christoph Spengel, these arbitrage practices have led to revenue losses of around €150 billion in the past two decades across 11 European countries and the US. 

At NoCeT, researchers have conducted an analysis of a Danish reform implemented in 2016 to enforce dividend-withholding tax. The findings reveal that this reform was remarkably successful in curbing arbitrage activities associated with cum-cum and cum-ex schemes, while demonstrating only temporary adverse effects on Danish companies. This project is part of a broader research agenda on dividend tax arbitrage within TAXLOOP, a research project lead by Floris Zoutman and founded by the Norwegian research council. The TAXLOOP-team has been invited to the Nordic Delegate Meeting to present the result of their research.

Overall, the workshop included three sessions. The first session comprised a presentation by Christoph Spengel, who is world expert on dividend tax arbitrage. Christoph Spengel offered a comprehensive analysis of the type of transactions involving cum-cum and cum-ex trading, with a special focus on Germany. He also presented the latest on the court cases around Europe and the related tax revenue collected so far on closed investigations.

It followed three presentations from the tax authorities of Norway, Sweden and Denmark on the type of fraudulent transactions detected across Scandinavian countries as well as the existing collaboration across stakeholders and across countries. The last presentation focuses on the latest technologies used to improve detection and prevention of dividend tax arbitrage, including the use of machine learning and block chain technology.

The last session featured our NoCeT researchers, Elisa Casi-Eberhard and Floris Zoutman, who offered an overview of the empirical evidence on dividend arbitrage across the world, including tax and non-tax arbitrage. Moreover, they presented the latest results of their research on the extend of cum-cum and cum-ex transactions around Europe and the effect of stricter enforcement on dividend tax arbitrage and on overall welfare effect on taxpayers, investors and companies.