With cum-ex stock deals, bankers and investors brought at least ten billion euros to the tax authorities. Now, for the first time, the district court in Frankfurt is dealing with the advisory role of tax attorneys.
In the tax scandal involving cum-ex stock deals worth billions, a new trial at the Frankfurt Regional Court began on Thursday. For the first time, according to the Frankfurt Public Prosecutor’s Office, the criminal liability of a consultant in stock transactions around the dividend date is at stake. The accusation of the prosecution is serious tax evasion or aiding and abetting. Initially, 19 negotiation dates are scheduled until the end of November.
Maple Bank advisors in court
Among other things, a former high-ranking tax attorney from the major law firm Freshfields Bruckhaus Deringer has to answer. He had advised Maple Bank, which had operated cum-ex transactions on a large scale and, according to investigators, caused tax damage of a good 388 million euros. The German institute with Canadian roots was closed in 2016 by the financial regulator Bafin because it was threatened with over-indebtedness due to a tax provision in connection with cum-ex transactions.
In November 2022, four former Maple bankers, including the former head of Germany, were sentenced to long prison terms by the Frankfurt Regional Court. The case against the former Freshfields tax lawyer and two Maple bankers had been separated.
Complimentary opinion for stock deals
The ex-Maple bankers are accused of having set up trading structures to carry out cum-ex stock deals. The lawyer and tax consultant supported this with “complimentary reports” and gave false statements to the tax authorities.
According to the indictment, the ex-Freshfields lawyer was “leading in the development and subsequent concealment” of the dividend record deal. He tried to dispel initial concerns from the circle of Maple bankers “with recognizable flimsy arguments and with reference to an expert opinion that is still to be drawn up”.
In the case of cum-ex deals, which peaked between 2006 and 2011, banks and investors never had capital gains taxes refunded and cheated the state by an estimated total of at least ten billion euros. In doing so, they used a loophole in the law at the time: Around the dividend record date, shares with (cum) and without (ex) dividend rights were pushed back and forth between those involved. In the end, tax offices reimbursed unpaid taxes. In 2012 the loophole was closed. For a long time it was unclear whether cum-ex deals were just immoral or illegal. In 2021, the Federal Court of Justice (BGH) decided that cum-ex transactions are to be classified as tax evasion.