THE HAGUE, May 28 (Reuters) - Morgan Stanley ( MS ) said

on Wednesday it will contest a Dutch public prosecutor's

investigation into tax evasion related to dividends on Dutch

shares.

The Dutch public prosecution service said on Wednesday it

would subpoena a foreign bank on suspicion of dividend tax

evasion. It said that between 2009 and 2013, a subsidiary of a

foreign bank based in Amsterdam submitted five corporate tax

returns in which a total of 124 million euros in withholding tax

was offset, related to 825 million euros in dividends that were

distributed on Dutch listed shares.

"Following an investigation...there is suspicion that the

subsidiary has unlawfully offset the withholding tax and is

therefore suspected of tax evasion," the Dutch Public

Prosecution Service said, adding it was also holding the

European parent company responsible.

The prosecutor did not specify the foreign bank being

investigated, but a source close to the investigation said the

probe concerns Morgan Stanley ( MS ).

Asked about the report, a spokesperson for Morgan Stanley ( MS )

said the bank was aware of the probe and would defend its case.

"Morgan Stanley ( MS ) rejects the Prosecutor's allegations about

this complex, decade-old matter and intends to contest them

vigorously," the bank said. "Despite our full cooperation and

the lack of clarity in the relevant tax legislation, the

Prosecutor is basing this decision on an incomplete

investigation and record, in violation of established process."

Morgan Stanley ( MS ) offers a full range of banking services in

the Netherlands since the opening of its Amsterdam office in

1997.