Status: 08/11/2022 19:18
The public prosecutor in Bonn asked Warburg Bank and a stockbroker to reimburse 190 million euros in connection with cum-ex transactions. However, the bank claimed that the taxes earned had been paid.
In connection with cum-ex transactions, the Bonn Public Prosecutor’s Office sent payment requests totaling around €190 million to Hamburg Warburg Bank and a British stockbroker. Of this amount, around 176.6 million euros are attributable to the private bank. Justice spokesman Sebastian Buß said it was the implementation of the first final judgment by the Bonn Regional Court in the Cum-Ex case.
However, a spokesperson for Warburg Bank said: “With the refunds made by Warburg to the Hamburg tax administration (in the tax proceeding), the taxes set by the tax administration for the years 2007 to 2011 due to the so-called cum- ex- Warburg Bank stock transactions have been fully settled.” The Bonn Public Prosecutor’s Office therefore suspended the execution during the confiscation process.
In the sentence confirmed by the Federal Court of Justice (BGH) in July 2021, the bank was obliged to repay more than 176 million euros to the state treasury, and the broker to pay 14 million euros, of which it had already deposited three million. Warburg Bank had already gone bankrupt in April with a constitutional claim against the confiscation of the money before the Federal Constitutional Court.
What is CumEx?
CumEx operations are so named because large blocks of dividend-entitled (“cum”) and non-dividend (“ex”) stock 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 with the tax authorities as possible. With this trick, those involved had their capital gains tax refunded on a large scale, which was never paid. Profits were shared. This was possible due to a legal loophole that has since been closed. By then, the ex-cum business was booming – for years.
billion in damages to the state
In ex-cum-deals, investors used a loophole in the law to deceive the German state for years. Around the dividend record date, several participants pushed shares with (“cum”) and without (“ex”) dividend rights back and forth. As a result, tax offices refunded unpaid capital gains taxes.
The state suffered billions in damage. In 2012, the tax loophole was closed. Several public prosecutors and courts across the country have been investigating for years to clear up one of the biggest tax scandals in post-war German history. Last year, the Federal Court of Justice ruled that ex-cum-deals were a criminal offense.
Commission of Inquiry in Hamburg
The case surrounding Warburg Bank’s cum-ex deals also has a political component. Chancellor Olaf Scholz (SPD) was the first mayor of Hamburg between 2011 and 2018. In 2016, the tax authorities there waived the institute’s reimbursement of 47 million euros in connection with the tax practice. An investigative committee of the Hamburg Parliament has been trying to shed light on the background to these events in the Hanseatic city since 2020.