Cum-cum transactions: banks are threatened with billions in back taxes | tagesschau.de

It’s more than four billion euros. This is the amount that German banks indicate the possible burdens of cum-cum transactions. Dem BR There are previously unpublished figures that show the damage caused by the illegal stock deals.

The topic of cum-cum deals seems to be on the minds of the Federal Financial Supervisory Authority (BaFin). In recent years, she has asked German banks and securities institutions several times what consequences participation in these transactions could have for German institutions. Above all, BaFin wanted to know the extent of the risk of back tax payments and whether the financial institutions had set aside provisions for this.

In 2017, 2020 and 2022, BaFin asked about these figures, but the authority kept them under wraps. A spokesman for BaFin said this BR When asked recently, he simply stated that “around 1,500 credit institutions and selected securities institutions” had recently taken part in the survey.

Different Rating of Cum-Cum Businesses

An overview prepared by the Federal Ministry of Finance for the Finance Committee of the German Bundestag now provides information about this for the first time. The two-sided paper marked as classified information is lying BR research before. It shows that German banks have changed their minds over the years when it comes to evaluating their own cum-cum deals.

According to BaFin, in the survey carried out in 2017, “only a small proportion of the institutions [angegeben]to have been directly involved in cum-cum business; the possible financial burdens were estimated at around 610 million euros; “Provisions of around 273 million euros have already been made,” the Federal Ministry of Finance said in its statement.

In the second survey, carried out in 2020, the banks gave significantly higher values: The amount of possible financial burdens was 960 million euros, of which around 530 million euros had already been transferred back to the tax authorities.

Federal Ministry of Finance sees Design abuse

At the beginning of 2020, the Hesse Finance Court decided in a first and groundbreaking judgment (file number: 4K890/17) that cum-cum share deals are abusive tax arrangements with a view to the tax code. Immediately afterwards, the Federal Ministry of Finance also agreed with this argument and made it clear in a letter to the highest financial authorities of the federal states that it sees an abuse of structure in the short loan of shares from foreign investors to German business partners over the dividend record date.

To put it very simply, in cum-cum transactions, securities from foreign shareholders are briefly lent to business partners in Germany over the dividend record date for tax saving reasons, as they can receive a refund of the capital gains tax on the dividend. The actors share the money from the tax authorities. The state is left empty-handed.

Revealed in 2016 BR research with national and international partners that Commerzbank, which was rescued by the state in the wake of the financial crisis, had also carried out such transactions. The grand coalition in power at the time made cum-cum deals much more difficult by law, retroactively to January 1, 2016.

BaFin survey: Banks admit billion-dollar transactions

The most recent BaFin survey from last year shows that cum-cum deals were apparently a billion-dollar business for German banks. “The total tax burden from cum/cum transactions amounted to […] to around 4.02 billion euros […]of which around 1.33 billion euros have already been offset and provisions have been made for possible tax back payments amounting to around 0.74 billion euros,” said the Federal Ministry of Finance in the current letter to the Finance Committee.

For the former Green Party member of the Bundestag Gerhard Schick, these figures are reason for a clear demand: “I expect those politically responsible in the states to finally set the course for tax investigations and public prosecutors so that these billions can really be recovered.”

The banks should not be allowed to get away with their illegal business at the expense of the taxpayer, says Schick, who now heads the Finanzwende association BR-Inquiry. Until the summer of 2017, he was also a member of the Cum-Ex Investigative Committee of the German Bundestag.

Damage of 30 billion as a “conservative estimate”

Financial scientist Christoph Spengel from the University of Mannheim assumes that the damage caused to the German state since 2001 is likely to be significantly higher. Spengel puts it at around 30 billion euros, which is “a conservative estimate,” said Spengel last year. He also criticized the slow legal clarification.

One BRAccording to a survey from last year, cum-cum verdicts in German courts are still a rarity. In comparison, the legal processing of comparable cum-ex stock transactions is already much further along.

In this context, ex-bankers have already been sentenced to prison by the Bonn Regional Court. The public prosecutor’s office in Cologne, which is responsible for this issue, is still investigating numerous suspects in connection with cum-ex and cum-cum transactions.