Great Britain

Germany's top court rejects appeal in "cum-ex" tax evasion case

BERLIN, July 28 (Xinhua) -- The German Federal Court of Justice on Wednesday confirmed an earlier verdict of a regional court in the trial over the so-called "cum-ex" tax fraud scandal and classified all such trades as illegal tax fraud.

The case was the result of traders using a legal loophole to trick governments and receive millions in tax repayments for taxes they had never paid.

In March last year, a regional court already declared two people mainly responsible for cum-ex trades and meted out suspended sentences of 12 months and 22 months, respectively.

One of the two British citizens was fined 14 million euros (16.5 million U.S. dollars) and the private bank M.M. Warburg was ordered to pay back more than 176 million euros.

The Federal Court now confirmed that "there could be no doubt" regarding the intentions of the accused. They would have acted illegally only to obtain tax refunds. The total tax damage in Germany alone is estimated somewhere between 12 billion euros and 50 billion euros.

Between 2007 and 2011, the two stock traders exchanged shares with (cum) and without (ex) dividend rights prior to the effective date. The exchanges made it difficult for authorities to understand who should pay taxes on capital gains and made the fraud possible.

After the accused appealed the first judgment, the Federal Court said that German law had a "clear regulation at the time of the crime" that the parties involved would have infringed. (1 euro = 1.18 U.S. dollars)

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