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Deutsche Bank and UBS lose bonus tax case Deutsche Bank and UBS lose bonus tax case
(about 1 hour later)
The UK Supreme Court has ruled Deutsche Bank and UBS should pay taxes on bonuses paid to their investment bankers over a decade ago.The UK Supreme Court has ruled Deutsche Bank and UBS should pay taxes on bonuses paid to their investment bankers over a decade ago.
The bonuses were paid to staff via offshore accounts in the form of shares to avoid attracting income tax and national insurance in 2004.The bonuses were paid to staff via offshore accounts in the form of shares to avoid attracting income tax and national insurance in 2004.
But HM Revenue and Customs said tax should have been paid on the bonuses.But HM Revenue and Customs said tax should have been paid on the bonuses.
Both banks appealed the initial decision, and continued to do so, taking the case to the Supreme Court. The banks had argued that restrictions placed on the payouts meant they were not liable for tax.
The Supreme Court ruled that restrictions placed on the share awards were so arbitrary, and short, that they may as well not have existed.
In the case of Deutsche Bank the bonus shares were awarded to staff through a Cayman Islands company, known as Dark Blue Investments.
To qualify for the payout staff only had avoid being dismissed, or not resign within six weeks of receiving their bonus.
After a period of time had elapsed the shares could then be redeemed by the employees as cash.
Under tax rules at the time, shares attracted only a 10% capital gains tax rather than income tax and National Insurance contributions.
Business Secretary Sajid Javid was a managing director at Deutsche Bank when the Dark Blue Investments was in operation having joined the bank in 2000.