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Cum-ex tax scandal cost European treasuries 55 billion
https://www.dw.com/en/cum-ex-tax-scandal-cost-european-treasuries-55-billion/a-45935370Cum-ex tax scandal cost European treasuries €55 billion
Date 18.10.2018
The scale of the financial damage caused by the so-called "cum-ex" tax scandal is much higher than previously thought, according to information provided to Reuters, ARD, Die Zeit and several other news organizations.
For the last few years, German authorities have been investigating hundreds of the tax fraud cases, where banks and stockbrokers rapidly traded shares with ("cum"
and without ("ex" dividend rights, with the aim of being able to conceal the identity of the actual owner and allow both parties to claim tax rebates on capital gains tax that had only been paid once.
Now, reports published on Thursday morning say that at least 10 other European countries beyond Germany have been affected by the tax fraud practices, and that the damage caused to state treasuries could be as high as €55.2 billion ($63.4 billion).
Spain's Santander bank is the latest big lender to be caught up in the scandal. According to the confidential documents released to the media organizations, Cologne prosecutors opened an investigation into Santander's role in June and have determined that they were involved in carrying out the trades.
A letter from German prosecutors to Santander's lawyers shows that they suspect the bank of having "planned and executed trades" that facilitated "severe tax evasion " from 2007 through 2011.
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.
This contrived "dual ownership" allowed both parties to then 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.
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