The Hamburg public prosecutor's office has for the first time taken over a cum-ex tax fraud investigation from Cologne, involving 26 suspects and a voluminous case file. The file reportedly contains 14 removal boxes and about 600 million individual files, and officials warn the review will take considerable time. The cum-ex scheme, which peaked between 2006 and 2011, is estimated to have cost the state tens of billions of euros and was declared a criminal offence by the Federal Court of Justice in 2021.
Hamburg Prosecutors Take Over Major Cum-Ex Investigation Involving 26 Suspects
FILE PHOTO - An exterior view showing the main entrance to the Hamburg Public Prosecutor's Office. (is associated with: «Hamburg prosecution takes on Germany's cum-ex tax fraud scandal») Christian Charisius/dpa
The Hamburg public prosecutor's office has for the first time taken charge of an investigation into Germany's high-profile cum-ex tax fraud scandal. It said on Thursday that it recently assumed responsibility for a related inquiry transferred from the Cologne public prosecutor's office; the case lists 26 suspects.
According to Handelsblatt, which first reported the development, several of the accused were employed at what was at the time the state bank HSH Nordbank.
Extensive further investigations remain outstanding in the proceedings, the conduct of which will take a considerable amount of time.The Hamburg office added that the case file covers 14 removal boxes and roughly 600 million individual files. Review and evaluation of the material are ongoing.
What Is Cum-Ex?
The cum-ex scheme involved market participants repeatedly trading shares 'cum' (with) and 'ex' (without) dividend entitlement through complex structures to claim tax refunds on dividend withholding tax that had not been paid. The practice peaked between 2006 and 2011 and unfolded across multiple financial institutions and jurisdictions.
Estimates suggest the scheme cost the German state tens of billions of euros. Those implicated initially argued they were exploiting a legal loophole and partly blamed the legislature; that defence has since been rejected.
Legal Ruling And Outlook
In 2021 the Federal Court of Justice ruled that cum-ex operations were not merely morally questionable activity in a legal grey area but constituted a criminal offence. The Hamburg office's takeover of the Cologne probe could lead to further criminal charges and civil recovery actions, though officials caution the sheer scale of the evidence means the process will be lengthy.
What To Watch: Investigators must sift an enormous volume of records to establish individual responsibility. The outcome could carry significant legal and financial implications for institutions and advisers tied to the scheme.
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