British Financier Charged in Cologne in Cum-Ex Tax Fraud Scheme
Cologne Public Prosecutor’s Office Accuses Financier
The Cologne Public Prosecutor’s Office has indicted a 54-year-old British financier for his alleged involvement in the Cum-Ex tax fraud scheme, which cost the German state €46.5 million in tax revenue.
The prosecutor’s office accuses the financier of three counts of aggravated tax evasion. It alleges that in 2010, he conspired with others to execute transactions through an Irish fund and a London investment company.
The accused is currently in custody in Denmark, where he was sentenced to a prison term in late 2024 for tax evasion in a separate case. The Cologne Public Prosecutor’s Office emphasizes the presumption of innocence that applies to the accused.
Cum-Ex Tax Fraud Scheme
Cum-Ex transactions involved a complex series of stock trades between banks, investment companies, and law firms. By taking advantage of dividend payments and tax loopholes, the participants claimed tax refunds for taxes that had not been paid. This tax-evasion scheme cost the German state billions of euros, with its peak activity occurring from 2006 to 2011.
Legal Developments
In 2020, the Bonn Regional Court convicted the first defendants in a Cum-Ex trial. The German Federal Court of Justice (BGH) later ruled in 2021 that the stock transactions constituted criminal offenses, dismissing the argument that they were mere exploitations of legal loopholes.
Cologne’s Role in Prosecution
The Cologne Public Prosecutor’s Office has taken a central role in investigating and prosecuting this major tax scandal. Its jurisdiction extends over the Federal Central Tax Office in Bonn. In recent years, several Cum-Ex trials have taken place, including the conviction of tax lawyer and Cum-Ex architect Hanno Berger.
Ongoing Investigations
The Cologne Public Prosecutor’s Office is actively pursuing over 130 Cum-Ex investigations involving approximately 1,700 suspects. Numerous trials are anticipated at the Bonn Regional Court in the coming years.
Significance of the Case
The Cum-Ex scandal has exposed the vulnerabilities within the German tax system. The ongoing investigations and prosecutions demonstrate the government’s commitment to combating tax evasion and protecting the public purse. The outcome of these cases will significantly impact the financial sector and send a strong message that tax fraud will not be tolerated.
