German prosecutors have searched the offices of BlackRock in connection to an ongoing probe into so-called dividend stripping.
The investigation centres on the use of so-called cum-ex transactions which exploit a loophole in Germany’s tax system that allows multiple parties to claim refunds on taxes paid on share dividends.
According to a source cited by the Financial Times, BlackRock is not a target of a criminal investigation but authorities are seeking details of the fund manager’s securities-lending activities between 2007 and 2011.
A BlackRock spokesperson said that the firm is “fully cooperating” with the investigation while the Cologne-based criminal prosecution office has made no comment as yet.
A probe into cum-ex transactions has been ongoing for many years but has gathered pace of late. Germany’s finance minister Olaf Scholz has recently described cum-ex-based tax schemes as a “scandal” and called for more European cooperation in closing down such schemes.
However, the timing of the raids has not gone unnoticed. BlackRock’s German chairman Friedrich Merz, who has condemned the use of cum-ex transactions in the past, is hoping to succeed current German chancellor Angela Merkel as the leader of the Christian Democratic Union party.
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