The State of Belgium reimbursed over 208 million euros in withholding taxes to foreign pension funds that had no right to the pay-outs, Knack magazine reported on Wednesday.
A British court confirmed to the Flemish weekly that one person had been arrested recently under a Belgian investigation into the presumed fraud.
The Brussels Office of the Public Prosecutor has been conducting an investigation since 2015 into a sophisticated scam that cost the treasury over 208 million euros in three years. The scam related to the reimbursement of withholding taxes on dividends.
When an investor resident in Belgium receives dividends from his or her shares in Belgian companies, the tax office automatically deducts a withholding tax at the source from the dividends.
The percentage withheld is currently 30%. However, pension funds established in a country with which Belgium has concluded a fiscal treaty can subsequently request the reimbursement of the withholding tax on the dividends.
Between 2012 and 2015, the Belgian tax authorities made several reimbursements of this type, but it later became evident that shareholders of U.S., British, Irish and Luxembourgian pension funds were apparently not eligible for the pay-outs.
The documents obtained by the Brussels Prosecutor’s Office from the Finance Ministry included other suspicious applications for reimbursements totalling 300 million euros, a sum never claimed by anyone.
Most of the disputed reimbursements were made through Solo Capital, a company founded by Dubai-based British millionaire Sanjay Shah.
According to Knack, the arrested person is reportedly Guenther K (50), a British national said to have worked in the past for Solo Capital.
He was arrested in the Manchester area just before summer at the request of a Brussels investigating judge who had issued a European arrest warrant for him.
Guenther K. is apparently resisting his extradition to Belgium.