https://cumex-files.com/en/This cross-border effort of investigative journalists (including my favourite Dutch investigative journalism team, FTM), have uncovered that more than €55 bn has been removed from EU state coffers by dodging taxation (most of it just being unethical, and some of it being illegal).
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€31.8 billion. This is how much a network of equity traders, tax advisors, bankers, lawyers and investors has removed, many including prosecutors say stolen, from the German state’s tax coffers, said a team of eight journalists from Panorama and newspaper Die Zeit after analysing data leaked to them on a UBS drive.
Cum-ex – this is the name German media have given to this scam. Internationally the different variants of these trades are known as dividend arbitrage.
Cum-ex and its variant cum-cum were highly complex share deals with no economic purpose other than to receive tax ‘reimbursements’ from the state – but for tax that had never in fact been paid. This is how it went. The participants would lend each other shares of major corporations, creating the appearance for the tax authorities that there were two owners of the shares when in fact there was only one. The bank which settled the trades would then issue a ‘confirmation’ to the investor that tax on dividend payment had been paid to the tax office – when in fact it had not. With this confirmation in hand, the investors were then ‘reimbursed’ by the state. It’s a bit like parents claiming child benefit for two – or more – children when there is only one child in the family.
The federal German government only called a stop to the practice in 2012 by making adjustments to the tax code, then making another adjustment in 2016 after one variant of the trade had continued. Its response had been so slow that a parliamentary inquiry was set up. Some critics think the finance ministry was fully aware of cum-ex all along but hesitated to close it down as it was one of the few profitable business lines of banks after the 2008 financial crisis.
Either way, cum-ex has been one of Germany’s biggest scandals in recent years, involving virtually the entire banking sector and many high-profile individuals and companies. But strangely it has gone largely unnoticed outside of Europe’s biggest economy.
What drives the traders and bankers behind this scandal? So far none of them has broken their silence. Schröm and Salewski wanted to know how far they went – and what they might be up to next.
Capital markets are global, trades cross borders in milliseconds. It is simply impossible for a single country’s media to investigate what’s happening. To overcome national barriers, CORRECTIV decided a year ago to coordinate a team of journalists from twelve European countries. 38 journalists have followed the traces that cum-ex, cum-cum and similar trades have left across Europe.
I highly recommend reading this. It's both written well and quite detailed. It also shows that investigative journalism is still very much alive, if you know where to look.
Other saucy bit:
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Frey says that German tax law has grown so complex that those who have written the laws no longer understand it themselves. If changes need to be made, law-makers rely on the tax advisory industry.
Lawmakers are advised by those who profit off the laws.
This post was edited by balrog66 on Oct 18 2018 03:28am