HSBC accepts $313 million fine to settle France tax-fraud claims

The investigation related to accusations against the bank’s French arm between 2014 and 2019.

French authorities said HSBC has agreed to pay just over €300mn in fines and back taxes in France to settle a sprawling dividend fraud investigation that has embroiled several European banks. HSBC will pay €267mn in penalties to French tax authorities, the financial prosecutor’s office said. The bank had already repaid €35mn in due interest payments and other sanctions, prosecutors added – according to Financial Times.

French investigators have been probing a wide cast of French and foreign banks over the past six years to see if they deliberately avoided tax on dividend trades. That echoes a similar scandal in Germany. Investigators have focused on so-called cum-cum trades: transactions designed to seek fiscal advantages tied to the payment of dividends.

In HSBC’s case, however, the penalty related to how it treated withholding tax. Some trades were attributed to the Paris branch of HSBC, allowing the bank to benefit from an exemption on withholding tax when dividends were paid on the shares, the bank said.

“The settlement . . . recognises the bank’s co-operation with the investigation, as well as the corrective measures it took to address the historic issues,” HSBC said in a statement. Investigators focused on HSBC’s operations in France between 2014 and 2019. The settlement is not an admission of guilt but allows the bank to draw a line under the probe and pay tax that it acknowledged had not been paid correctly.