SHARE
COPY LINK

TAX EVASION

German police make nationwide raids over tax fraud

German prosecutors confirmed Thursday they raided 19 separate locations across the country as part of a massive investigation into so-called "cum-ex" tax fraud.

German police make nationwide raids over tax fraud
Germany's official 'Elster' online tax declaration. Photo: DPA

Frankfurt's public prosecutors office said 181 investigators and tax officials raided 19 offices and private homes located across the states of Hessen, Lower Saxony, Baden-Württemberg and Bavaria on Tuesday, in an operation relating to three separate cases.

The raids are linked to seven individuals suspected of fraud to the tune of 50 million between 2007 and 2011.

So-called “cum-ex” share deals involved multiple cooperating participants exchanging stock in companies amongst themselves around dividend day.

SEE ALSO: Germany calls to 'turn up heat' on financial crimes

Complex changes of ownership allowed them to claim tax rebates on a single payout several times over before sharing out the proceeds.

Used across Europe, this practice cost Germany 7.2 billion, Denmark 1.7 billion and Belgium 201 million since 2001, according to an investigation published last October.

German lawyer Hanno Berger, identified as the mastermind of the scam, has been awaiting trial since last May, along with five former employees of Hypovereinsbank, a subsidiary of Unicredit.

Hypovereinsbank has already agreed to repay 113 million to German tax authorities and pay a fine of €5 million.

Since 2012, Frankfurt prosecutors have launched 10 investigations based on the same kind of fraud involving a total of 815 million in lost tax, of which more than half has been recovered.

As part of the investigation in Germany, several banks have been raided in the past, including Deutsche Bank, which is not in itself under investigation, but several of its former employees are involved in the “cum-ex” affair.

In the sprawling investigation, the German offices of BlackRock, one of the largest asset managers in the world, were also raided last November.

SEE ALSO: Over 1,000 Germans face HSBC tax prosecutions

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

CROSS-BORDER WORKERS

Germany and France extend Covid tax breaks for cross-border workers

Germany and France have agreed to extend the relaxation of tax rules for cross-border workers until the end of the year.

Cross-border workers commute by car but they can for now continue to work at home
Cross-border workers usually have to commute but can for now continue to work at home.. Photo: Fabrice Coffrini / AFP

The agreements between France and the governments of Belgium, Luxembourg, Germany, Switzerland and Italy avoids double taxation issues for anyone travelling across the French border to or from those countries in order to work.

During the pandemic, tax rules were eased to allow French cross-border employees, like their counterparts in Belgium, Luxembourg, Germany, Switzerland and Italy, to work from home without having to change their tax status.

The deals, which were established at the beginning of the health crisis in March 2020, were due to end on September 30th – and would have plunged cross-border workers still working from home because of the health crisis into renewed uncertainty over their taxes.

The latest extension of these agreements means there’s no confusion over where a cross-border worker pays their taxes until December 31st – for example cross-border workers who work in Geneva but live in France, who normally pay their taxes and social security contributions in Switzerland. 

Under normal circumstances, anyone living in France who works in Switzerland can spend no more than 25 percent of their time working from home. If they exceed this time limit, they would have to pay these tax charges tin France rather than in Switzerland, which would be much higher.

The agreements between France and Belgium, Luxembourg, Germany and Switzerland “provide that days worked at home because of the recommendations and health instructions related to the Covid-19 pandemic may … be considered as days worked in the state where [workers] usually carry out their activity and therefore remain taxable,” according to the statement from the French Employment Ministry.

In the case of Luxembourg, days worked from home because of the health crisis are not counted in usual the 29 day limit.

SHOW COMMENTS