(Bloomberg) – More than 20 years ago, after Frankfurt appealed to overturn the verdict in the case, five former German banks had to try more than 20 years ago at Deutsche Pfandbrief.
According to the Frankfurt ruling, the allegations stem from tax-driven transactions between 2004 and 2006. Prosecutors investigated the deal and filed a lawsuit in September 2021. In February last year, the court ruled that there would be no trial. Prosecutors appealed, and the Frankfurt judge supported them.
This is related to the first known criminal case in a German trial, and prosecutors will need to test in court whether the strategy is a crime.
In contrast to Cum-EX, traders use European dividend payments to earn duplicate tax refunds. During the dividend season, both-to-date transactions require the sale of shares, reorganizing them from one jurisdiction to another, avoiding the government’s taxes on dividends. This practice is also called dividend arbitrage.
Cum has long been considered to be less controversial and practiced more widely than cum-ex. Meanwhile, Germany changed its tax laws to prevent both practices.
Deutsche Pfandbrief AG was one of the casualties of the 2009 financial crisis. A portion of its assets was later converted into German Pfandbriefbank AG. The lender’s spokesman said the allegations were related to the actions of the former entity and targeted employees who left the company for a long time.
He added that tax claims for these transactions had been paid many years ago.
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