Financial Damage Forecast at 7.5 Billion According to Ministry of Finance - Financial Losses Projected at 7.5 Billion: Ministry of Finance Forecasts Deficit
In a recent development, Green finance politician Katharina Beck has criticised the Federal Government for remaining vague and unclear about a potential legal change regarding the extension of retention periods for tax-related records. The criticism comes amidst the ongoing investigations into the Cum-Cum tax scandal, a complex scheme involving share transactions that exploited dividend rights to improperly reclaim withholding taxes.
The current status of the Cum-Cum tax scandal in Germany reveals that out of 253 suspected cases, only 81 have been closed so far. The tax authorities have reclaimed approximately 227 million euros from these cases, but the estimated total damage is around 7.5 billion euros. The Federal Government and the tax authorities are continuing investigations into the remaining 172 cases, demonstrating the substantial scale of the fraud.
The scandal, which is considered a bigger brother of the Cum-Ex stock deals, has reportedly cost the German treasury approximately 7.5 billion euros. Unlike Cum-Ex, Cum-Cum deals were not about the refund of capital gains tax not paid.
Recent related developments include Denmark reclaiming €232 million tied to Cum-Ex deals passing through German accounts, highlighting the international dimensions of these tax schemes and ongoing recovery efforts by authorities.
The first criminal trial for Cum-Cum is pending, with the first indictment against five former managers of the Deutsche Pfandbriefbank approved in March. According to the German financial supervisory authority Bafin, 54 banks admitted to being involved in Cum-Cum transactions.
Financial scientist Christoph Spengel from Mannheim University estimates the tax damage from Cum-Cum at around 28.5 billion euros. The Federal Ministry of Finance is examining necessary measures to secure the tax base and combat tax evasion and tax avoidance, including a possible extension of retention periods.
Lars Klingbeil, the Federal Minister of Finance, announced the extension of retention periods for booking records, but further details about a potential legal change remain unclear. The traffic light coalition had previously shortened the retention period to eight years, and it is yet to be seen how the proposed extension will impact the ongoing investigations.
Beck expects the Federal Government to take decisive action to secure the records and all other necessary measures for effective clarification. The citizens' movement "Finance Transition" suggests that Cum-Cum deals continued until at least 2016.
As the first trial for Cum-Cum approaches, with the start date for the trial at the Wiesbaden Regional Court yet to be determined, the German Government continues its efforts to recover the lost tax revenues and bring those responsible to justice. The legal framework and court decisions, such as the 2024 BFH judgment, are shaping how these cases are processed and judged moving forward.
Despite the ongoing investigations into the Cum-Cum tax scandal, which has reportedly cost Germany approximately 7.5 billion euros, the Federal Government's proposed extension of retention periods for tax-related records remains unclear. Financial scientist Christoph Spengel estimates the tax damage from Cum-Cum at around 28.5 billion euros, and vocational training in EC countries could offer potential solutions to prevent such large-scale tax evasion in the future. Businesses, industries, and finance sectors should collaborate with vocational training programs to develop expertise in tax law and financial management. The finance minister, Lars Klingbeil, has announced an extension of retention periods, but further details require clarification to ensure effective investigation and prosecution.
