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Rahman Ravelli say a court ruling is a landmark in Germany’s efforts to recover funds lost to Cum-Ex

Author: Azizur Rahman  29 July 2021

Posted in : Cum-Ex Media Coverage .

Germany’s highest criminal court has ruled that claiming capital gains taxes that were not withheld via dividend trading arrangements – a practice known as Cum-Ex  - constitutes criminal tax evasion.

The Federal Court of Justice in Germany has rejected appeals against a lower court ruling from March 2020, which found that Cum-Ex deals were criminal tax evasion. The ruling had resulted in suspended jail sentences for two British former bankers.

In a statement, the court  said: "The Federal Court of Justice confirmed the opinion of the lower court that the assertion of capital gains tax that was actually not withheld against the tax authorities on the basis of such Cum-Ex transactions constitutes the criminal offence of tax evasion.’’

The ruling may boost Germany’s attempts to recover some of the tens of billions of euros it lost to Cum-Ex. The practice involved company shares being sold or swapped just before a dividend pay-out, to give the impression of numerous owners. Various parties involved would then claim tax rebates.

EU business crime and regulatory practice Rahman Ravelli, told Law360 that the "landmark" decision confirms Germany’s “aggressive enforcement strategy and determination to recover lost funds’’ and emphasises it is "one of the most active countries in bringing sanctions against banks and individual brokers in relation to Cum-Ex trading."

They added that the decision sets a strong precedent for future prosecutions by lower courts in Germany and will assist in uncovering further Cum-Ex related cases.

Rahman Ravelli's comments featured on Law360. (Subscription required)

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Azizur Rahman

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Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.

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