Cum-Ex Tax Criminal Proceedings – A Legal Analysis
Definition of Cum-Ex Transactions
So-called Cum-Ex transactions are coordinated share trades, usually conducted in the over-the-counter (OTC) market. In these deals, shares are purchased shortly before the dividend record date (cum dividend), often in combination with hedging instruments such as total return swaps, and then delivered after the dividend payout (ex dividend). At the end of this complex chain of transactions, capital gains tax that has only been withheld once is credited or refunded multiple times.
For general guidance on white-collar investigations, see our practice areas in criminal defence.
If you are confronted with allegations of tax evasion, VAT fraud or other tax-related offences in Germany – including situations comparable to those described on this page – you should promptly consult our English-speaking criminal defence solicitors in Frankfurt with particular expertise in tax evasion and criminal tax law and, where appropriate, also in white-collar crime and corporate investigations.
For a confidential initial assessment of your situation and the development of a tailored defence strategy, you can reach us on +49 69 710 33 330 or by email at kanzlei@dr-buchert.de.
Tax Evasion and Legal Consequences
The potential declarations made to tax authorities as a result of these transactions have been classified by German regional courts and the Federal Court of Justice (BGH) as incorrect and/or incomplete within the meaning of Section 370 para. 1 no. 1 of the German Fiscal Code (AO), and therefore constitute tax evasion.
Learn more on our tax evasion defence page.
Clarification of Legal Questions
Over the past two years, many crucial legal questions regarding Cum-Ex transactions have been largely resolved. These include:
- Who is considered the beneficial owner, and to whom is this attributed under Section 39 AO?
- Can beneficial ownership in the same share exist more than once?
- Is a dividend compensation payment so closely connected to the net dividend payment that withholding tax becomes relevant even if not withheld in practice?
- Does a (second) tax certificate suffice to establish a legitimate refund claim?
The Federal Fiscal Court (BFH) Approach
The approach of the Federal Fiscal Court (BFH, I R 22/20) is highly restrictive. It states that if a structured overall contractual model is designed solely for the purpose of claiming unpaid tax and if all transactions are merely considered pass-through steps, such arrangements must be treated as abusive conduct.
Agreement of the Federal Court of Justice (BGH)
The BGH has explicitly aligned itself with this restrictive interpretation of the BFH.
For further insights into how German courts handle such cases, see our page on German criminal procedure.
Key Points of the Criminal Law Perspective
Several central aspects are critical in criminal law assessments of Cum-Ex cases:
- A genuine tax levy is a prerequisite for any refund.
- There are actual duplications or artificial transfers of beneficial ownership.
- Tax returns are deemed incorrect or incomplete because they implicitly claim that capital gains tax was withheld and remitted.
For more background on criminal liability, see our section on general criminal defence in Germany.
Defence and Individual Strategy
The defence of corporations, banks, or individuals in Cum-Ex criminal proceedings will increasingly focus on gaps in evidence. For individual defence strategies, besides proving the specific conduct and its scope, the subjective element—particularly intent—will play a key role.
Structural Adjustments and Judicial Perceptions
The Regional Court of Bonn described a “sense of disturbance”, based on certain structural adjustments made in reaction to a 2009 circular from the Federal Ministry of Finance and/or a report in the German magazine Der Spiegel.
Relevance for Professionals
These considerations also affect professionals such as lawyers and tax advisers, particularly with respect to professionally neutral actions like advisory services or legal opinions.
For legal support in such cases, visit our section on Cum-Ex and Cum-Cum defence.
FAQ – Cum-Ex Tax Criminal Proceedings
What is a Cum-Ex deal in practice?
It involves coordinated trading of shares around dividend dates, enabling multiple claims for the same withholding tax refund.
Why are Cum-Ex trades prosecuted as tax evasion?
Because they allowed double or multiple refunds of withholding tax, leading to enormous losses for the German state.
Which actors are affected?
Banks, financial institutions, traders, corporate executives, and advisers have all been investigated in Cum-Ex proceedings.
Can professionals like lawyers or tax advisers face liability?
Yes. Even professionally neutral actions such as advisory work or legal opinions can be examined in Cum-Ex proceedings.
Do I need a specialist defence lawyer for Cum-Ex charges?
Absolutely. These cases require experienced criminal defence lawyers in Frankfurt with expertise in white-collar crime defence.
Contact Us – Specialist Criminal Defence Lawyers in Frankfurt and Nationwide
- Dr. Caroline Jacob, Criminal Defence Lawyer, Specialist in Criminal Law
- Frank M. Peter, Criminal Defence Lawyer, Specialist in Criminal Law
- Of Counsel: Prof. Dr. Frank Peter Schuster
- Cooperation Partner: Tax Adviser and Former Tax Investigator Frank Wehrheim
Our law firm Buchert Jacob Peter has been based in Frankfurt am Main for more than 25 years, with extensive experience in criminal defence. We represent our clients nationwide across Germany.
📞 Phone: +49 69 710 33 330
✉️ E-Mail: kanzlei@dr-buchert.de
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