EU Parliament calls for inquiry into €55 billion cum-ex tax fraud
04 Dec 2018

Members of the European Parliament have called for an inquiry to examine various aspects of the cum-ex multi-billion euro tax fraud scheme, which has hit Germany and possibly several other European countries.

The lawmakers want the probe to establish the ‘real actors’ behind the scam, whether there were breaches of national laws and the actions undertaken by supervisors.

Also of interest are the failings in “the coordination across the member states which allowed these tax theft schemes to continue for years, despite having been identified.”

Legislators want the inquiry to be a springboard for reform and action.

Their resolution urges national authorities to “end white-collar impunity” by opening criminal investigations, imposing dissuasive penalties and bringing justice on the “perpetrators and enablers, including … lawyers, accountants and banks,” an EU statement said.

The cum-ex tax fraud — also dubbed cumex — was initially uncovered in 2012 and thought to have impacted only Germany but is now estimated to have hit the coffers of many other EU countries, including Switzerland, France, Spain, Italy, Belgium, the Netherlands, Denmark, Austria, Finland, Poland, Czech Republic and Norway.

“The fraud revolved around banks facilitating the buying and then reselling of shares belonging to foreign investors on the dividend pay-out day. The speed with which these transactions were carried out and the lack of communication between authorities meant that tax administrations struggled to identify the shares’ real owners,” an EU statement explained.

“This then exposed the authorities to fraudulent claims, for tax refunds from foreign persons who pretended to have paid a dividend tax, which, as foreigners with a fictitious proof of having paid tax elsewhere, they could recover. Often, tax authorities reimbursed an unpaid tax many times over.”

A spokesman for the European Securities and Markets Authority said: “ESMA, as a first step, is indeed assessing the issue. Possible next steps, if any, will depend on the outcome of this assessment – which I cannot pre-empt at this stage.”

Advance your CPD minutes for reading this article, by signing up and using the CPD Wallet

Must Read

Bearing witness to financial crime, across party lines

If it seems like an odd recipe for financial oversight, it’s also a surprisingly effective one: take five to ten congressional staffers, exile them to a squalid basement office with “hard-boiled” charm in the U.S. Senate’s oldest building, give them access to subpoena powers and a seemingly endless series of… Read More

Anti-money laundering analysis: UK FCA and EU blacklists update

A key element in the application of the risk-based approach (RBA) to financial crime is the identification by a firm of those countries with which its customers are closely linked and which are also adjudged to be high risk in financial crime terms. There are many lists of such high-risk… Read More