In 2018, the European journalist network CORRECTIV exposed the largest tax fraud in European history. Through so-called cum-schemes — cum-cum, cum-ex, and cum-fake — investors have systematically exploited weaknesses in national dividend withholding tax (DWT) rules, with estimated revenue losses across Europe exceeding €200 billion.
TAXLOOP analyses trading patterns and regulatory frameworks across at least 17 European countries to identify which countries have been affected, quantify revenue losses, and assess what makes regulation effective. A key finding is that Denmark's 2016 reform — which required shareholders to confirm beneficial ownership — raised annual DWT revenues by approximately 130 percent. Norway's 2019 reform, which lacked this requirement, had no measurable effect. The project also examines the interaction between dividend taxation and wealth taxation, showing that a wealth tax can, under certain conditions, offset firms' incentives to defer dividend payments.
The project applies econometric methods, machine learning, and optimal tax theory, and is the first to provide a comprehensive European-level analysis of cum-scheme activity and effective policy responses.
