The Belgian tax authorities can continue their attempts to recover millions allegedly lost due to a scheme involving fraudulent tax refunds to American pension funds, after a federal judge in New York has refused to dismiss the lawsuit, Bloomberg reported on Friday.
Belgium accuses three investors of setting up sham pension funds to obtain tax refunds from Belgium. The investors claimed that the refunds related to taxes that Belgium had withheld on dividend payments, but according to Belgian authorities, those dividends were fictitious.
In addition to the €52.2 million ($60.6 million), Belgium is also seeking damages and legal costs.
The accused investors and pension funds argued that the Belgian tax authorities had filed the lawsuit too late, but the US District Court for the Southern District of New York rejected that argument on May 20.
At least some claims were filed on time, and there is still factual disagreement regarding when Belgium discovered, or should have discovered, the alleged fraud, according to Judge John Koeltl.
The timing of most cases of alleged fraud falls well within New York's statute of limitations, which in this case was extended by nearly 10 months during the Covid pandemic, the judge stated.
The lawsuit is one of many filed by European tax authorities against those involved in the so-called Cum-Ex scandal.
In Cum-Ex fraud, named after the Latin terms for 'with' and 'without', multiple people claimed a refund of dividend tax from the tax authorities, even though the levy was paid only once.
This was done by selling shares around the date the dividend is paid, after which both the seller and the buyer claimed a refund of the tax on that profit distribution.
