Denmark's tax authority, Skatteforvaltningen (SKAT), lost a significant 1.44 billion pound (approximately $1.95 billion) lawsuit in London against Sanjay Shah's hedge fund and other entities. The case involved allegations of defrauding the Nordic state through 'cum-ex' dividend trading strategies. This ruling comes ten months after a Danish court sentenced Shah to 12 years in prison for a related criminal case.
Key Takeaways
- SKAT's lawsuit against Sanjay Shah's hedge fund failed in London's High Court.
- The judge found SKAT was not misled, citing 'flimsy' internal controls.
- The ruling involved alleged 'cum-ex' dividend trading strategies between 2012 and 2015.
- Sanjay Shah was previously sentenced to 12 years in a separate Danish criminal case.
- SKAT plans to appeal the London High Court judgment.
London Court Rules Against SKAT's Claims
The London High Court delivered its judgment on Thursday, October 2, 2025. Judge Andrew Baker concluded that SKAT had not been misled into paying tax refund claims. The court found that Sanjay Shah and other defendants did not attempt to trick the Danish authority. The alleged 'cum-ex' dividend trading strategies occurred between 2012 and 2015.
SKAT initiated the lawsuit against Shah and his hedge fund, Solo Capital, in 2018. The trial began in 2024. SKAT argued that Shah and Solo Capital were responsible for the majority of the claims.
Case Details
- Claim Amount: £1.44 billion ($1.95 billion)
- Defendant: Sanjay Shah and Solo Capital hedge fund
- Jurisdiction: London's High Court
- Alleged Period: 2012-2015
- Strategy: 'Cum-ex' dividend trading
Focus on SKAT's Internal Controls
Judge Baker's ruling placed responsibility on SKAT's internal processes. He described the authority's controls for assessing and paying dividend tax refund claims as "flimsy to be almost non-existent." This assessment was central to the court's decision.
"The judgment finds that SKAT was not misled into paying by misrepresentations made to it through the tax refund claims it received, as it alleged," Judge Baker stated in a summary of his ruling. "Its controls for assessing and paying dividend tax refund claims were so flimsy as to be almost non-existent."
This finding suggests that the court believed any payments made by SKAT were due to its own procedural weaknesses rather than direct deception by the defendants.
Understanding 'Cum-Ex' Trading
'Cum-ex' schemes emerged after the 2008 financial crisis. These schemes involved rapid trading of shares around the dividend payment date. A syndicate of banks, investors, and hedge funds exploited loopholes in the tax systems of several European countries. Countries like Denmark, Germany, and Belgium were affected. The goal was to claim multiple refunds on taxes that had only been paid once, or not at all.
SKAT Plans Appeal
Following the unfavorable judgment, SKAT announced its intention to appeal. The Danish government agency expressed strong disagreement with the court's findings. This indicates a continued legal battle in the complex case.
SKAT has pursued Sanjay Shah for several years. This pursuit included his extradition from Dubai in 2023. The agency has also maintained a parallel criminal case in Denmark, alongside the civil lawsuit in London.
Defense Team Hails "Overwhelming Victory"
Chris Waters, a lawyer representing Sanjay Shah, his family, and associated companies, welcomed the High Court's decision. He described the outcome as a significant win for his clients. Waters also suggested that the lawsuit should not have been brought to court.
"Today's judgment is not only an overwhelming victory for Sanjay Shah and the Shah defendants, but it is also a catastrophic loss for SKAT," Waters commented. "SKAT has failed in every aspect of its claim."
Shah's Danish Criminal Conviction
Despite the London civil case outcome, Sanjay Shah was previously sentenced in Denmark. In December 2024, a Danish court convicted him of a 9 billion Danish crown (approximately $1.4 billion) dividend tax fraud. He received a 12-year prison sentence for this criminal case, which also involved 'cum-ex' trading. This criminal conviction remains separate from the London civil judgment.
The difference in outcomes highlights the complexities and varying legal interpretations across different jurisdictions concerning 'cum-ex' trading schemes. The London court's decision focuses on whether SKAT was actively misled, while the Danish criminal court found Shah guilty of fraud based on Danish law.
Financial Context
- London Lawsuit Value: £1.44 billion ($1.95 billion)
- Danish Criminal Conviction Value: 9 billion Danish crowns ($1.4 billion)
- Exchange Rate (approx.): $1 = 6.3681 Danish crowns; $1 = 0.7399 pounds
Future Implications and Appeals
SKAT's decision to appeal means the legal saga is far from over. The appeal process will likely focus on the interpretation of whether SKAT was misled and the adequacy of its internal controls. The outcome of the appeal could set precedents for similar international tax fraud cases.
The case underscores the ongoing challenges tax authorities face in combating sophisticated financial schemes. It also highlights the importance of robust internal controls within government agencies handling significant financial transactions.
