THE HAGUE (Reuters) -Morgan Stanley 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.

Asked about the report, a spokesperson for Morgan Stanley said the bank was aware of the probe and would defend its case.

"Morgan Stanley 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 offers a full range of banking services in the Netherlands since the opening of its Amsterdam office in 1997.

(Reporting by Benoit Van Overstraeten and Bart Meijer; writing by GV De Clercq; Editing by Kirsten Donovan and Leslie Adler)