Dubai Court Rules Shah Owes Denmark $1.25 Billion in Cum-Ex Case

By: William Hoke

Dubai’s highest court has upheld a lower court ruling that Sanjay Shah owes the Danish government AED 4.6 billion (about $1.25 billion) in a cum-ex dividend trading case.

The Danish Tax Agency said in a May 17 statement that Dubai’s Court of Cassation had rejected an appeal by the British businessman of a September 2022 ruling by the emirate’s Court of Appeal that Shah and unspecified others were liable for repaying refunds received through cum-ex dividend transactions. Two newspapers in the United Arab Emirates also reported on the high court’s decision.

Dubai police arrested Shah in June 2022 after the Danish government accused him of using his U.K. company — Solo Capital Partners LLP — and other entities to file fraudulent claims for refunds of dividend withholding tax that had never been withheld. In April the Dubai government said the Court of Cassation upheld a lower court's decision to extradite Shah to Denmark.

Denmark’s pursuit of Shah and other parties allegedly involved in cum-ex trading involves other countries as well. In January 2022 the Danish Tax Agency resurrected a tax fraud case against Solo Capital Partners that had been discharged by the U.K. High Court of Justice in 2021 as an inadmissible foreign revenue claim.

“Proceedings against the alleged ringleader Sanjay Shah and a number of persons and companies related to him are also pending before the court in London, where Shah and the other defendants have a number of assets that can only be recovered on the basis of an English judgment,” the Danish Tax Agency said. “The judgment in Dubai will therefore not immediately affect the further proceedings in England.”

A cum-ex trading scheme typically involves the cross-border sale or swap of shares around the time a dividend is to be paid out, in which a party to the transaction claims credit for taxes paid on the dividend even though no tax was withheld on the income.