Tax fraud: Top German court confirms cum-ex trades were illegal

The Court also upheld the decision of the Bonn district court, which issued a €14 million fine for one of the traders and ordered the private bank MM Warburg to pay back €176 million. [Shutterstock/Valerii Evlakhov]

Germany’s Federal Court of Justice in Karlsruhe dismissed the appeal of two British traders on Wednesday, confirming that so-called “cum-ex” transactions are illegal, in a key ruling in what has become the biggest tax scandal in the country’s history involving hundreds of suspects.

The court also upheld the decision of the Bonn district court, which issued a €14 million fine for one of the traders and ordered the private bank MM Warburg to pay back €176 million.

The traders currently under investigation used a loophole to trick the German government whereby they received several tax reimbursements worth millions despite only paying the tax once. Although the practice is alleged to have been around since the early 1990s, traders tricked the state between 2005 and 2011 until the loophole no longer existed in 2012.

“Finally! […] All public prosecutors’ offices and courts involved must be equipped in such a way that there is no statute of limitations,” tweeted Green MEP Sven Giegold, adding that the trader profession required stricter supervision. 

“The ruling is a slap in the face for Finance Minister Olaf Scholz,” said Left Party MP Fabio de Masi, referring to Scholz’s attempts as mayor of Hamburg to protect the Warburg bank which was heavily involved in the scandal.

(Nikolaus J. Kurmayer  | EURACTIV.de) 

 

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