Morgan Stanley's €101M Settlement: A Landmark in Dividend Tax Evasion

Morgan Stanley faced a €101 million fine by the Dutch Public Prosecutor for dividend tax evasion involving its London and Amsterdam entities. The penalty is distinct from a settlement with the Dutch Tax Administration. The case revolved around improper tax rebate claims by ineligible foreign recipients.

The Dutch Public Prosecutor has levied a significant fine of €101 million on two Morgan Stanley entities situated in London and Amsterdam, citing dividend tax evasion. This freshly announced penalty comes in addition to Morgan Stanley's separate tax liability settlement with the Dutch Tax Administration, which the company concluded at the end of 2024, inclusive of accrued interest.

Under Dutch law, domestic shareholders are allowed to reclaim or offset dividend taxes, while foreign recipients usually do not enjoy the same privilege. However, Morgan Stanley reportedly used a specialized structure to enable ineligible parties to improperly claim these tax rebates. Earlier this year, a court summons was anticipated, but Morgan Stanley opted to accept the fine ahead of criminal proceedings.

The company expressed satisfaction over resolving this historical issue, which arose from corporate tax filings in the Netherlands over 12 years ago. The exchange rate at this time situates $1 at 0.8625 euros.

(With inputs from agencies.)