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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.
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.
Prosecutor Pascal Prache cited “trading schemes . . . that allowed [the bank] to benefit from an exoneration on tax payments associated with dividend transfers”, which were potentially fraudulent.
The HSBC settlement is the second in the widening dividend tax fraud investigation after Crédit Agricole’s last year. Some of France’s biggest banks including BNP Paribas, Société Générale and Natixis were among those raided by investigators in 2023 as part of the probe.
Those banks have contested the allegations on cum cum trades, saying these were legal and part of normal exchanges of derivatives between banks and clients, people close to the investigation and the lenders have said.
However, the estimated potential fines and tax bills they face have crept up over the years, with France’s economy ministry at the last count in 2025 saying that up to €4.5bn in revenue could have been lost due to the schemes.
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The cum cum trades — a nickname derived from the Latin for “with-with” — involved non-French investors temporarily passing their shares in a French company to a bank in France to duck tax on dividend payments, in exchange for a commission.
At Crédit Agricole, which prosecutors said was one of the smallest alleged offenders investigated, prosecutors said they had found trades where there were no economic reasons for the operations other than to avoid tax.
In Germany, the courts have gone after individuals including tax lawyers accused of masterminding so-called cum-ex trades, on which governments reimbursed taxes on dividends that were never paid to start with.