Germany’s top criminal court has outlawed the controversial trading practice known as comx the scheme involved traders claiming rebates on taxes that had never been paid costing taxpayers billions of euros germany’s federal court of justice has made it clear those who get refunds for taxes they never paid are liable to prosecution like many other financial jugglers two british bankers made a lot of money with these comex activities they say they were simply exploiting a tax loophole which was not necessarily illegal now they’ve lost their case and been sentenced to probation one of them has been ordered to pay back the 14 million euros profit he made the comex scam ran for many years here’s how it worked on the day the dividends were paid on shares investors sold the shares on to each other during the course of the day only one of the parties paid capital gains tax on the dividend and was thus eligible for a rebate those who paid no tax before selling them on applied for refunds nonetheless.
The authorities had no way of tracking the transactions and paid out to anyone who claimed and could prove ownership on that day the schemes that were being run had neither to do with legal structures no with simply exploiting a legal loophole you know as the legal situation was unambiguous there was no loophole here on the contrary it was a bold grab into the till into which all taxpayers normally pay which by the way is no different from ordinary sales tax fraud analysts expect many more comex prosecutions to follow across the entire financial sector a whole range of renowned banks and investors were involved in the tax theft which left the authorities simply overwhelmed for many years all right let’s get some analysis now with my colleague stephen bearsley from dw business so good to have.
German top court finds Cum-Ex trading illegal
you here with us on this story how did this go on for so long with nobody noticing probably one of the biggest reasons is that because there isn’t a traditional victim in the sense that there’s no individual or group of individuals who are really hard hit and go crying to the police in this case the victim was the state itself the state treasury as you can imagine that’s big monolithic it doesn’t really know sometimes what’s coming in what’s coming out so it’s hard to imagine a situation which it raises an alarm suddenly the second is that this was so institutionalized financial advisors lawyers involved high-powered banks as we just heard this was seen as a legal loophole for so long that i think many alarm bells didn’t go off when people saw this in the end it was really a 30 year old desk clerk and a tax center in bonn who raised the red flag and said this doesn’t look right why are there so many tax rebates coming from one pension fund in the u.s to the german central bank .
so that led to a number of other things 2016 the ball really started rolling they started talking to some of the bankers and investors who are really at the center of this is this a scheme that was only used in germany or also elsewhere lately this is used everywhere i mean this was 55 billion euros is believed to have been lost by treasuries across europe 12 different countries the majority of it 32 billion in uh germany now imagine the wire card scanner one of the biggest scandals in german history four billion euro loss to creditors through that company’s fraud this is tremendous eight times that so it’s a very very big deal um and this would involve institutional investors from around the world these are massive sums i mean i can’t even wrap my head.