German banks: $63.4 billion saved or tax evaded?

4 September, 2019

cum-ex
The two British citizens, Martin Shields, 41, and Nicholas Diable, 38, are accused of having defrauded the German state of €447.5m (£405m) from London’s banking district with so-called cum-ex trading schemes. The trial, which is scheduled to last until January next year, is being followed with great interest across Europe because many more investment bankers, working for clients including Deutsche Bank, Barclays and Sweden’s SEB, are suspected to have practised cum-ex deals between 2001 and 2012, when legislators closed the loopholes that made the practice possible.

[Novmber 2018]
Berger hanno - Edited

At least 10 other European countries beyond Germany have been affected by German banks tax fraud practices, and the damage caused to state treasuries could be as high as €55.2 billion ($63.4 billion). Contrived “dual ownership” allowed both parties to claim tax rebates even though both were not entitled to it. With the process having gone undetected for years, billions in tax went uncollected by the German state, mostly in the form of rebates which should never have been paid out at all.    Industry experts say the practice went on for decades before it was properly grappled with. The scandal came to light in 2016 when it emerged that several German banks had exploited a legal loophole which allowed two parties simultaneously to claim ownership of the same shares.

Hanno Berger, the central suspect in the investigation, now lives in exile in the Swiss Alps. He advised the Australian bank Macquarie, another caught up in the scandal, on cum-ex trading but claims he was not paid for it. He says the scheme was based on a legitimate legal loophole. “They (the German state) cannot punish others for their mistakes,” he said.

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