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Dividend stripping involves buying a stock just before its
dividend rights expire, then selling it, taking advantage of a
now-closed legal loophole that allowed both buyer and seller to
claim tax credits.
"Citi's Germany unit has never been trader, broker or structurer
of cum ex trades," a Citi spokesman in Frankfurt said. He said
the bank did act as a settlement agent for clients' trades, but
only supplied its infrastructure had no knowledge of the actual
trades being carried out.
German daily Handelsblatt reported on Tuesday that the Frankfurt
tax office had asked for 706 million euros ($791.07 million) in
back taxes from Citi.
The Citi spokesman said the financial authorities had not asked
the bank for the back taxes.
A number of large banks have already paid hundreds of millions
of euros in back taxes and tens of millions to settle disputes
with German authorities.
Citigroup and several of its subsidiaries are on a list of about
130 banks which have allegedly been involved in cum-ex trades.
German financial watchdog Bafin is surveying the country's 1,800
lenders to see if they are at risk from potential demands for
back taxes from "cum-ex" trades.
Bafin last month closed the German operations of Canada's Maple
Financial on impending financial over-indebtedness related to
tax evasion investigations.
($1 = 0.8925 euros)
(Reporting by Arno Schuetze. Editing by Jane Merriman)
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