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US sues Deutsche Bank over tax scam

AFP · 9 Dec 2014, 08:41

Published: 09 Dec 2014 08:41 GMT+01:00

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The suit filed by the US attorney in New York asks for $190 million in back taxes and penalties for an operation it alleged was made expressly to avoid taxes on a $100 million (€81 million) gain in the sale of stock.

But the bank said the issue had been settled five years ago with the US tax authority and that it does not understand why the government is pursuing it again.

The government said the bank set up three shell companies in 1999-2000 with the purpose of executing "a series of pre-planned transactions" meant to eliminate the tax liabilities on the sale of the stock.

"These shell corporations collectively served as an underfunded special-purpose vehicle with no function other than to be stuck with a tax bill that it could never pay," the Manhattan US attorney said in a statement.

"This was nothing more than a shell game." The Internal Revenue Service determined that the total tax liability, plus penalties and interest, is more than $190 million (€154 million).

In a separate statement Deutsche Bank said it would fight the case.

"We fully addressed the government's concerns about this 14-year-old transaction in a 2009 agreement with the IRS. In connection with that agreement they abandoned their theory that DB was liable for these taxes," it said.

Story continues below…

"While it is not clear to us why we are being pursued again for the same taxes, we plan to again defend vigorously against these claims."

SEE ALSO: Legal fees lose Deutsche Bank €1 billion

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