Many financial institutions in Germany are involved in the tax evasion scandal involving complex dividend transactions. Now the next judgment has been made.
In the billion-dollar cum-ex scandal, the Wiesbaden district court made a judgment: A former banker at Hypovereinsbank was sentenced to a total of two years’ imprisonment on probation for tax evasion in three cases, the court announced on Tuesday.
Another ex-banker received a prison sentence of one year and two months, also on probation, for aiding and abetting tax evasion in three counts. In addition, the men have to pay 60,000 euros or 20,000 euros to the state treasury and bear the costs of the proceedings, as a court spokeswoman said. The public prosecutor’s office had demanded several years of imprisonment without parole.
The Frankfurt Public Prosecutor’s Office had accused the men of tax evasion using a complex system. Between 2006 and 2008, shares with a volume of more than 15 billion euros were traded via the Hypovereinsbank for the company of a client of the tax lawyer Hanno Berger. The men had systematically aimed at having false certificates reimbursed for capital gains taxes that had not been paid at all. The tax damage was therefore 113 million euros.
In the trial, which began in March 2021, Berger should have appeared in court – but he stayed away. Berger, who is considered the architect of the cum-ex deals, has to answer in separate proceedings at the regional courts in Bonn and Wiesbaden.
A legal loophole exploited
In cum-ex deals, banks and other financial players used a loophole in the law to cheat the state. Around the dividend record date, shares with (“cum”) and without (“ex”) dividend rights were pushed back and forth between several participants. In the end, tax offices refunded capital gains taxes that were not paid. According to estimates, the German state suffered damage of at least ten billion euros. The tax loophole was only closed in 2012. The Federal Court of Justice ruled in 2021 that cum-ex transactions are to be classified as tax evasion.
Several courts and public prosecutors have been working on the scandal for years. There are always raids on banks. Only a few of those involved have been prosecuted: In March 2020, the Bonn Regional Court sentenced two British stock traders to suspended sentences. Another Bonn trial resulted in a prison sentence for an ex-banker in the summer of 2021. At the beginning of February, the Bonn Regional Court then sentenced the former managing director of a subsidiary of the Hamburg private bank Warburg to several years in prison.