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German Banker Jailed over Cum-Ex

Author: Niall Hearty  3 May 2024

Niall Hearty of Rahman Ravelli considers the latest chapter in the share-selling tax controversy

A former bank board member was sentenced by a German court to three years and two months in jail for his part in a €93.4 million Cum-Ex scheme.

The Bonn Regional Court announced that it had sentenced the 50-year-old man, who has not named, for tax evasion in relation to Cum-Ex. 

Cum-Ex was a share-selling practice that exploited tax loopholes until around 2012 - when countries realised what was happening – and cost nations billions in lost tax revenues. Shares were traded in a way that disguised the identity of their owner so that more than one party could claim rebates on capital gains tax, even though that tax had only been paid once at most.

The Bonn court said that its findings were based largely on the defendant's extensive confession, which was confirmed by the evidence of other witnesses; some of whom were prosecuted separately.

It ordered the confiscation of €1.5 million from the defendant as the profit he had made from the Cum-Ex scheme. He had been involved in a scheme that requested more than €215 million in tax refunds and gained €93.4 million from the Munich tax office.

His sentencing is the eighth conviction out of a total of 11 defendants in recent German Cum-Ex cases. It comes as British trader Sanjay Shah is standing trial in Denmark on criminal charges regarding a Cum-Ex scheme that allegedly defrauded the country's tax authority SKAT out of £1.4 billion. Mr Shah is also one of dozens of defendants being sued by SKAT in London's High Court for running the scheme.

These recent cases are only the latest in a series – and are a clear sign that the fall-out from Cum-Ex has not ended. The amount of Cum-Ex trading and the huge sums involved make it likely that it will be some time before all legal activity relating to it is complete.

Authorities in various countries have set about holding to account those they blame for the damage that Cum-Ex has caused to their finances. As a result, many who created or gained from Cum-Ex schemes are coming under scrutiny and will need to prepare responses to any allegations they face.

Niall Hearty C 07998

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Niall has a wealth of corporate crime expertise and an ability to coordinate global bribery and corruption cases. His achievements in such investigations have made him a logical choice for corporate clients.

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