Dáil Éireann Debate, Wednesday - 30 September 2020
72. Deputy Carol Nolan asked the Minister for Finance if his attention has been drawn to the issue of dividend arbitrage stock trading or cum-ex trading, which is an illegal tax evasion strategy, in the European Union; if his attention has been further drawn to such a practice here; and if he will make a statement on the matter. [27623/20]
View answerThe European Securities Markets Authority (“ESMA”), the EU’s securities markets regulator, launched a formal inquiry concerning Cum-Ex, Cum-Cum and other dividend withholding tax reclaim schemes in July 2019. On 24 September 2020 ESMA published a final report on the findings of this inquiry, based on information received from National Competent Authorities (“NCAs”). The key recommendation in the report is that NCAs for securities markets should be empowered to share information with tax authorities to assist in the detection of withholding tax reclaim schemes. Ireland’s NCA is the Central Bank of Ireland, who consulted with Revenue in connection with its contribution to the ESMA report.
The report published by ESMA is available at the following link:
https://www.esma.europa.eu/press-news/esma-news/esma-makes-proposals-help-prevent-and-detect-wht-reclaim-schemes
As can be seen from the ESMA report, NCAs of many countries, including Ireland, do not consider their country to be a potential target of such schemes. This is due to a number of factors such as the design of the underlying tax system or the way in which tax refunds are administered. In the context of Ireland, the relevant provisions of Irish tax legislation are not designed in a way that would enable or facilitate the use of these schemes domestically. In addition, Revenue’s internal controls surrounding the processing of repayments of tax withheld from dividend payments would minimise the opportunity for such abuses.
