Swedish bank SEB hit by German tax demand for $ 575 million

The logo of Nordic Bank SEB Group is seen during the SIBOS Banking and Financial Conference in Toronto, Ontario, Canada on October 19, 2017. REUTERS / Chris Helgren / File Photo

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STOCKHOLM, Dec.15 (Reuters) – Swedish bank SEB (SEBa.ST) said on Wednesday it had been hit with a € 511m ($ 575m) tax demand from the Germany and that its head office in the country was raided this week, both linked to the so-called cum-ex operations.

The bank has denied any wrongdoing and said it will appeal the claim.

“The review concerns transactions which were carried out before the entry into force of a change in German tax law in 2016. SEB is of the opinion that they were carried out in accordance with the rules then in force”, a- he said in a statement.

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SEB said in a separate statement that the German public prosecutor visited the bank’s office in Frankfurt on December 14 and 15 and requested information on the alleged cum-ex transactions. The bank said it was cooperating with the authorities.

“To our knowledge, SEB in Germany has not offered or carried out any transactions with the aim of recovering taxes that have not been paid. We are distancing ourselves from this type of arrangement,” he said, describing the cum-ex scandal.

The scandal is potentially the biggest post-war fraud in Germany involving a stock exchange scheme, which authorities say cost taxpayers billions of euros.

He is the subject of multiple investigations involving numerous financial institutions across Germany as the government attempts to recover money it claims has been stolen from the state.

German prosecutors in Cologne said in a statement that a raid had been carried out in Frankfurt, but declined to name the bank involved.

SEB declared that, in accordance with the accounting rules in force, it had not made any provision at group level related to this matter. He also said that further requests could not be ruled out and that could have a negative financial impact on the bank.

SEB said that, including the latest order, the German tax administration demanded a total of € 936 million in alleged ex-cum transactions, and that legal proceedings are expected to take several years.

SEB said last year that the tax administration had asked its German subsidiary DSK Hyp AG to retroactively repay “transparently declared withholding tax” for more than five years, adding that it strongly opposed decision.

($ 1 = 0.8882 euros)

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Reporting by Johan Ahlander and Helena Soderpalm Editing by Niklas Pollard and Mark Potter

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