Morgan Stanley May Owe $42 Million in Dutch Dividend Tax Case

Morgan Stanley may owe as much as 42 million euros ($45 million) to the Netherlands in a tax-avoidance case related to dividend payouts.

The Dutch tax authority said Morgan Stanley that engaged in “dividend stripping,” a controversial practice where a shareholder uses a series of trades to lower its tax bill. While the claim was thrown out two years ago, the Amsterdam Court of Appeal overturned that decision in a ruling this week.

Countries across Europe are cracking down on various forms of trading schemes that target anomalies in the withholding taxes that governments levy on payments to shareholders. The ...