Reuters reports that 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 $868m in back taxes from Citi.
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