Well, we have to assume that they are. If you listen to the interview* with that undercover journalist talking in London to the guy with the offer – he was very open that this is still happening. It is not necessarily Cum-Ex but Cum-Cum and other forms dividend arbitrage deals. After the German market assumed at least 11 billion (more likely 30 billion) euros of damage, after it became less attractive, the criminals moved elsewhere. Therefore we have to assume it’s still going on.
It’s definitely not a German problem but a European one – other countries are thought to be problematic, it is not only Germany and Denmark, it is also France and at least eight other EU countries.
One has to distinguish between legality and tax enforceability. Under German law it is quite clear that CUM EX has no effect from a taxation point of view when it’s discovered, because you cannot demonstrate that these trades have any other objective than to optimize tax – and such operations are non tax enforceable. That means that when they are discovered, the German authorities say ” You can’t claim these tax rebates”.
On the other hand the question is, is it illegal? We have no final court decisions yet, but we assume that it is illegal. It basically means that you enable tax fraud systematically .
For the German CUM EX, if your objective is to receive a tax rebate twice for a deal that only happened once, this looks very much not like a loophole but more like fraud. You have to be an immoral banker to believe that this is moral.
The worst part of the whole CUM EX crisis is that it demonstrates that hundreds of people in exactly these international banks which contributed to the financial crisis (and who all said that they understood what they did wrong and that they want to build a more moral and ethical based banking system) are now, again, in the same mindset and obviously none of them called the police. So only one person of the hundreds who were involved called the police and that is what is so breathtaking about it. That people who were collectively contributing to the public discussion and saying “we understand, we went too far, we have to bring ethics into our business etc”, hundreds knew and none reported it.
Still, we have this parallel society, in which there is another moral sentiment than in other large sections of the population. This is why this scandal is so shocking.
this is how the whole cumex scandal was discovered, see https://cumex-files.com/en
Answered by: Sven Giegold, MEP
- There is a lot of discussion about tax evasion and tax havens. Do you think there is any progress in this front? Are there any tangible examples?
- Why can banks and financial investors involved in CUM EX extract these huge amounts of tax money and nobody notices it?How did CUMEX deal go unnoticed for such a long time? What went wrong with the regulatory system that allowed this to go on?
- What’s the deal with offshore banks?
- How come that company founders of small enterprises pay a lot of taxes when at the same time large groups (especially in the digital industry) generating billions in sales pay very little?
- What is the tax on investment income compared to the tax on labour income in European countries?
- Why is the Tobin tax not introduced yet?