All in

9. LATIN LANGUAGE

Another warm March day had begun. It wasn't even noon yet, but the sun was already heating up to a full capacity and it was almost unbearable to stay outside shadows. Ali Ahmed, a banker who lived in London all his conscientious life, was slowly sipping his morning coffee and enjoying the view of the Persian Gulf beach. That's why Ali had chosen this villa as his new home, as there was a view for more than a million - the clear blue pool water shone in the sun, but along the house, like a long snake, there was a golf course of Saadiyat Beach, designed by the golf legend Gary Player, where one of the brands of the course was gazelles wandering around as lone spectators to the endless streak of games.

It took just 10 minutes for Ali to get into his yellow Ferrari f8 Spider sports car and get to his office on the 58th floor of the Abu Dhabi Business Center without any traffic jams on the six-lane highway. Life without the eternal congestion and hustle and bustle of London now seemed like a breeze of cool wind to the ones being in the sun. Besides, the Abu Dhabi business centre was not smaller than the City in London - it accounted for about two-thirds of the United Arab Emirates' economy. The time zone for communication with Europe was not a problem either, so Ali sat down at his desk, lifted his legs on it, opened his new Samsung Fold 2 phone and pressed on the contact already added to the favourites.

"Hi, Tomass! I have a new client for you. I will you send a US shareholder's residence certificate together with the application for a refund of the dividend tax. Everything as in the old system, so feel free not to waste your time on extensive checks."

"Well, Ali, the tax refund amounts are getting huge. Not sure we can get the payment to the shareholder quickly. These "cum-ex" structures are something we may need to understand better. I just know that in Latin it stands for "with-without" and refers to the status of shares before and after a dividend is issued. Have to look into this some more."

"Tomass, but what's there to be checked? That's how the system works – a Danish company pays to the US shareholder dividends and withholds the tax. Once the shareholder gets the residence certificate proving he is a taxpayer there the Danish state under the relevant tax treaty makes a refund of the tax withheld. You can see that these shareholders are US individuals with pension plans, a type of retirement account that allows owners to invest in a wide range of financial instruments, so all safe and sound. Am I missing something?"

"277 of them, all requesting large amounts. Give us a couple of days, Ali. Need to talk to my colleagues."

"Sure, Tomass, will call you then by the end of the week."

After the call Ali quickly found another number among the favourites.

"Houston, we have a problem."

"Are you drunk, Ali? You have called Edwin."

"It's just an expr.. Never mind. Just spoke to Tomass at the Danish tax authorities. I think they start to smell something. I mean they might start to suspect that the "cum-ex' trades appear as if the individuals with pension plans had purchased shares of Danish companies and paid taxes on the dividends, and find out that neither was true."

"Just keep calm, Ali. We have got hundreds of millions this way in the refunds. Why would they even start sniffing the air?"

"The amounts are getting bigger, Edwin. They start asking more questions."

"Ok, I'll talk to the client and come back to you. Meanwhile please keep calmer your spending. Lenny Kravitz visiting your pool party for a concert has brought too much attention to you and your source of income. In case should we fail to continue in Denmark, start making contacts with other tax administrations – in Austria, Belgium, Switzerland, Germany."

"I hear you, Edwin, but we must have some fun in life too, otherwise - what's the point? So far on the paper it's all fine – the US shareholders have received the refunds, not us and our clients. The tax authorities do not know that they have advanced all the tax refunds on to us. Everything is taken care of – even at our company level we have created the respective client accounts and trading records. The tax authorities didn't even have a database to check whether an individual pension plan actually owned the shares it claimed."

"You're having too much and too loud fun, Ali. The client's don't like it. No wonder the Danish authorities are asking more questions. Nearly 2 billion USD have been refunded in response to more than 4000 refund applications over the last couple of years — about 15 applications every working day. In July alone, ½ billion in refunds was paid — about 25 million per working day, 3 million every hour. Maybe it's time to do something else?"

"Look, Edwin. You know how the system works – these 27 pension plans primarily trade with one another. One would place an order to buy the shares once they dipped below a certain price. Soon after another of these plans place orders to purchase shares that the other plan still didn't own. Once the refund is paid, the buy order is cancelled. The money goes a long way before it comes to me and my wife. The structure is perfect and everything works smoothly.

"Yeah, but I heard you had a rough discussion with your UK company's new compliance officer who threatened to go the UK tax authorities. The clients are getting upset."

"No worries, he won't - all's been taken care of."