Denmark’s tax authority SKAT has lost its $1.9bn London lawsuit against hedge fund manager Sanjay Shah and his defunct firm Solo Capital, marking a major setback in its long-running effort to recover losses tied to cum-ex dividend tax schemes, according to a report by Reuters.
London’s High Court ruled that none of the 4,000-plus tax refund claims at the centre of the case were valid under Danish law, but found SKAT’s own oversight systems were “so flimsy as to be almost non-existent”. Judge Andrew Baker said Shah and associates were able to extract vast sums because of the authority’s weak controls.
SKAT has vowed to appeal the ruling, describing it as fundamentally flawed. The decision follows Shah’s 12-year prison sentence in Denmark last year in a parallel criminal case, which he is appealing separately.
Cum-ex strategies, which proliferated after the 2008 financial crisis, involved rapid trading of shares around dividend dates to exploit loopholes in European tax systems, generating billions in disputed refunds.
Legal experts described the judgment as an “overwhelming victory” for Shah and a “devastating blow” to SKAT, though the tax authority recently secured a $500m award in a separate US jury trial.
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