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

Author

Listed:
  • Bjørkheim, Julie Brun

    (Institute for Sosial Research)

  • Iden, Hanna

    (Dept. of Business and Management Science, Norwegian School of Economics)

  • Kristoffersen, Marte

    (Dept. of Business and Management Science, Norwegian School of Economics)

  • Zoutman, Floris

    (Dept. of Business and Management Science, Norwegian School of Economics)

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.

Suggested Citation

  • Bjørkheim, Julie Brun & Iden, Hanna & Kristoffersen, Marte & Zoutman, Floris, 2026. "The Missing Paper Trail: Comparing Dividend Withholding Tax Enforcement in Norway to Denmark," Discussion Papers 2026/4, Norwegian School of Economics, Department of Business and Management Science.
    • Handle: RePEc:hhs:nhhfms:2026_004
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    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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