Police carry out Cum-ex tax raids in four states
April 11, 2019
Frankfurt prosecutors said Thursday that about 170 officers raided 19 residential and business premises in the states of Hesse, Lower Saxony, Baden-Württemberg and Bavaria as part of the ongoing investigations into the Cum-ex tax fraud.
The cases involved a type of short sale or loan of shares that suspects made just before a company was due to pay a dividend. By exploiting an interpretation of the tax code, multiple people were able to claim ownership of the same shares, and the right to a tax refund.
The scheme involved banks, accountancy firms, financial houses and law firms across Europe and the United States and might have cost the German treasury more than €10 billion ($11.7 billion) and tax authorities up to €55 billion across Europe.
The latest raids were carried out on Tuesday, and three individuals have been accused of fraud totaling €50 million from 2007 to 2011.
The practice was discovered about 10 years ago, when tax officials started questioning requests for refunds on transactions totaling hundreds of millions of euros. A 2012 reform of the tax code brought the practice to a halt.
German authorities are conducting 10 separate investigations into Cum-ex schemes, some of which involve bank employees.
Swiss case
Also on Thursday, a court in Switzerland fined a former employee of Bank J. Safra Sarasin 20,400 Swiss francs (€18,100 or $20,380) and gave him a 13-month suspended prison sentence for corporate espionage after he gave a journalist internal bank documents, which were then used by German authorities in the Cum-ex investigations.
Two others were fined. They included a German lawyer at the heart of the case, who was fined 165,600 Swiss francs on a lesser charge of violating the Swiss Banking Act.
jm/amp (AP, dpa)