He is regarded as a pioneer for “cum-ex deals” on a large scale in Germany, with which the state was cheated out of billions of euros. Now the former tax attorney Hanno Berger has again been sentenced to prison.
The Wiesbaden district court has sentenced the key figure in the “Cum-Ex” tax scandal, Hanno Berger, to a total of eight years and three months in prison. The court ruled that the 72-year-old was guilty of three counts of tax evasion. In addition, proceeds of almost 1.1 million euros are to be confiscated from Berger’s assets.
The public prosecutor’s office in Frankfurt am Main accused Berger of being involved in complex “cum-ex” stock deals from 2006 to 2008, which led to unauthorized tax refunds of 113 million euros. In the transactions mediated by Berger, Dax shares worth 15.8 billion euros were traded via former employees of Hypovereinsbank. The beneficiary was a real estate investor who has died in the meantime. The profits were divided.
The possible maximum for Berger was 15 years. The prosecution had asked for a prison sentence of ten years and six months, the defense had pleaded for Berger’s acquittal.
BGH evaluated business model as a crime
Berger is the best-known figure in the business model, which the Federal Court of Justice classified as a criminal offense in 2021. Berger advised banks, funds and investors on the construction of “cum-ex” deals and recruited wealthy clients through his network. For this he received millions of euros.
He was once an official in the Hessian tax administration, later he changed sides and became self-employed as a tax lawyer.
Berger sees himself as a victim of a judicial scandal
Berger had repeatedly rejected the allegations and saw himself as the victim of a judicial scandal. He did not invent the business model in which shares with (cum) and without (ex) dividend rights were postponed around the dividend record date and taxes not paid at all were refunded. However, he is regarded as a pioneer for the fact that “Cum-Ex” could be operated on a large scale in Germany.
Because of the deals, which peaked between 2006 and 2011 and were widespread among banks, the German state lost an estimated at least ten billion euros. In 2012 the tax loophole was closed. Berger escaped German justice for years by fleeing to Switzerland.
What is Cum Ex?
Cum-ex trades are so-called because large batches of stocks with (“cum”) and no (“ex”) dividend entitlements were shuffled back and forth in rapid succession around the payout date. The deliberately opaque transactions had only one goal: to create as much confusion as possible with the tax authorities. With this trick, those involved had capital gains tax refunded on a large scale, which was never paid. The profits were shared. This was made possible by a legal loophole that has since been closed. By then, the cum-ex business had been booming – for years.
Total penalty for Berger still open
He was extradited in February 2022 and sentenced to eight years in prison by the Bonn Regional Court last December. With the judgment in Wiesbaden, a total sentence of up to 15 years can be formed by subsequent decision. However, the Bonn judgment is not yet final. Berger, on the other hand, appealed to the Federal Court of Justice.
AZ: 6 KLs – 1111 Js 18753/21