For years, investors, stock traders and banks fooled the tax authorities – and had billions of taxes reimbursed that were never paid. Karlsruhe is now setting the course for processing.
“Cum-ex” share transactions with billions in damages for the German tax authorities are to be assessed as tax evasion and thus punishable. This not only corresponds to the sense of justice, but also results directly from the law, the Federal Court of Justice (BGH) decided on Wednesday in Karlsruhe.
The first supreme court judgment in a Cum-Ex case was eagerly awaited. It is now clear that the criminal investigation of the scandal can continue. (Az. 1 StR 519/20)
The judges rejected all revisions against the nationwide first criminal judgment in a cum-ex procedure. It is now final. In March 2020, the Bonn district court sentenced two ex-stock exchange traders from London for tax evasion or aiding and abetting to prison terms on probation. The BGH also confirmed that one of the men had to pay back profits of 14 million euros and that the private bank MM Warburg involved in the scandal had to repay more than 176 million euros.
Cum-ex transactions are so called because large packets of shares with (“cum”) and without (“ex”) dividend entitlements were pushed back and forth in rapid succession around the cut-off date for the distribution. The deliberately opaque transactions by investors, stock market traders and banks had only one goal: to create as much confusion as possible among the tax authorities. With this trick, those involved could have capital gains tax refunded on a large scale, which was never paid. The profits have been split.
The actors had always said they had only used a tax loophole. The BGH gave this a clear refusal: The law clearly showed that only a tax that was actually paid could be asserted against the tax authorities, said the presiding judge, Rolf Raum. “There was no gap here.” With Cum-Ex it was only about one thing: the “bare grip in the cash register, into which all taxpayers normally pay”.
The BGH also ruled that the confiscation of the profits from the transactions negotiated here between 2007 and 2011 is not excluded due to the statute of limitations. The legislature clarified this with a new passage in the criminal code introduced in December 2020.
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
