The next verdict has been made in the billion-dollar tax scandal surrounding cum-ex share transactions. This Tuesday, the Frankfurt Regional Court imposed a prison sentence of three years and six months on Ulf Johannemann, a former top lawyer at the major law firm Freshfields Bruckhaus Deringer, for aiding and abetting serious tax evasion in four cases. This was the first time that a tax lawyer from a major law firm was prosecuted for his role as an advisor in the Cum-Ex complex.
In addition to the former Freshfields top lawyer, a former Maple banker was convicted. He received a two-year suspended sentence for tax evasion. He had already made a confession at the start of the trial. The ex-top lawyer had advised Maple Bank on cum-ex deals in which it was unclear for a long time whether they were illegal. Freshfields prepared reports on the tax admissibility of the share deals. The Frankfurt Public Prosecutor’s Office had accused the tax lawyer of having made it possible to deceive the tax authorities with “courtesy reports”.
According to the indictment, Maple Bank caused tax damage of around 388 million euros with cum-ex transactions – until it went bankrupt in 2016 because of the threat of over-indebtedness due to a tax provision for cum-ex transactions.
In cum-ex deals, which reached their peak between 2006 and 2011, investors were reimbursed for capital gains taxes they had never paid and are estimated to have defrauded the state of at least ten billion euros. They took advantage of a loophole in the law. The loophole was only closed in 2012. In 2021, the Federal Court of Justice decided that cum-ex transactions should be viewed as tax evasion.