Judgment of the Federal Court of Justice: Cum-ex transactions are punishable by law

From a loophole in the law The opinion of the Federal Court of Justice is out of the question: The Cum-Ex deals are tax evasion, and that is a criminal offense, according to the decision in Karlsruhe.

The verdict is trend-setting. It is of immense importance for the criminal courts in the lower courts and for the public prosecutor’s offices. Because with the fundamental decision of the Federal Court of Justice, you now have legal certainty, said Dietlind Weinland, press judge at the BGH: “There are a large number of proceedings that are still pending in the instances. Today’s judgment has created great clarity for the instances because the Federal Court of Justice confirmed today for the first time that the behavior in the cum-ex stores is to be assessed as criminal tax evasion. ”

This means: Anyone who has participated in such cum-ex deals or has benefited from them must expect that they will also be convicted of tax evasion. And anyone who has turned the big wheel has to be prepared for a long prison sentence. Just recently, the Bonn Regional Court sentenced a former employee of the private bank MM Warburg to imprisonment for more than five years.

Judgments against two UK stock traders upheld

Before the BGH it was about two British stock traders. They got away with relatively mild suspended sentences because they had cooperated extensively with the public prosecutor’s office. The BGH confirmed the judgments. The Warburg-Bank involved in the business has to repay 176 million euros to the state treasury, one of the dealers 14 million euros, which he evaded.

In cum-ex deals, stock dividends have played a major role. These are profits from stock corporations that are distributed to shareholders. They are usually taxed. Investors had – through a highly complex, sophisticated system – had taxes refunded that had in fact never been paid.

Judge: No loophole

The defendants’ defense lawyers had always argued that their clients had merely exploited a loophole in the law. This was legal. A criminal liability is therefore ruled out.

The presiding judge of the 1st Criminal Senate, Rolf Raum, made it clear that the BGH assesses it differently: “The business dealings are neither legal design models nor the mere exploitation of a loophole in the law because the legal regulation was clear. A loophole did not exist here. ”

Those who would have benefited from the business would have enriched themselves at the expense of the general public, so BGH-Richter Raum further. “It was rather – not unlike normal sales tax fraud – a bare grip on the cash register, into which all taxpayers normally pay.”

The German state has suffered billions in damage through the punishable cum-ex transactions. How much exactly is unclear. Tax experts come to a sum of more than ten billion euros.

File number: 1 StR 519/20