The Missing Paper Trail: Comparing Dividend Withholding Tax Enforcement in Norway to Denmark

Julie Brun Bjørkheim (), Hanna Iden (), Marte Kristoffersen () and Floris Zoutman ()
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Julie Brun Bjørkheim: Institute for Sosial Research, Postal: Institute for Sosial Research, Munthes gate 31, 0260 Oslo, Norway, https://www.samfunnsforskning.no/english/people/res/juliebjo/
Hanna Iden: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway
Marte Kristoffersen: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway
Floris Zoutman: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway, https://www.nhh.no/en/employees/faculty/floris-tobias-zoutman/

No 2026/4, Discussion Papers from Norwegian School of Economics, Department of Business and Management Science

Abstract: Governments across Europe lose significant tax revenue to cum-cum trading — a strategy in which taxed investors temporarily transfer shares to tax-favored entities around dividend dates to exploit withholding tax differentials. We compare Norway’s 2019 enforcement reform to Denmark’s successful 2016 reform. Using daily securities-lending data, we show that spikes in shares on loan around ex-dividend dates disappeared in Denmark immediately after the reform but remain fully intact in Norway. We estimate that Norway loses at least NOK 550 million annually to continued cum-cum activity. The decisive difference lies in the information architecture: Denmark abolished relief-at-source, requiring everyone to file a refund claim and submit documentation to tax authorities, creating a comprehensive transaction paper trail. Norway’s reform tightened documentation requirements but left relief-at-source intact, meaning tax-favored investors never file a claim and remain invisible to the tax administration. These findings have direct implications for the forthcoming EU FASTER Directive.

Keywords: Tax Enforcement; Documentation Requirement; Dividend Tax; Security Lending (search for similar items in EconPapers)
JEL-codes: G18 H26 K22 M21 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2026-05-20
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