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Noble address: The private bank MM Warburg was involved in the cum-ex scandal
Photo: Axel Heimken / dpa
The verdict is a milestone in one of the biggest economic scandals in German history: the Federal Court of Justice (BGH) has finally confirmed what everyone actually knew and yet many vehemently denied: Cum-ex deals are criminal tax evasion.
Until recently, resourceful lawyers, consultants and even some media representatives came across the villages with the legend that there was nothing legally objectionable to the longstanding practice of having taxes reimbursed several times by the tax authorities for taxes that had been paid once. Or that Cum-Ex is just the professional equivalent of the tax fraud of the little man who tricks on the tradesman's bill. Or that German tax law is so complicated that it is easy to get tangled up there and to a certain extent become a sinner against your will.
This nonsense belongs in the moth box from now on - at least if you respect the highest court judgment of the BGH. It feels like ten years too late, but at least in time to give the state's campaign to recapture stolen tax billions a solid legal basis. More than 1000 suspects are currently being investigated. It will take years to remove the mountain and, where possible, to get money back; but the chances are better than ever since this Wednesday.
As a reminder: With cum-ex deals, investors, banks and stock traders had cheated the tax authorities for billions of euros for years. It worked like this: shares with (“Cum”) and without (“Ex”) entitlement to payment of a dividend were pushed back and forth until it was unclear who they belong to. The perpetrators took advantage of the confusion and had the state reimbursed them multiple times with capital gains tax, which they had never paid or only paid once. With the BGH ruling, it is now clear at the latest that these trickery was not a matter of border-legal tax optimization, but of tax evasion - and also that acts that were committed between 2007 and 2011 are not statute-barred.
The fact that this legal backing from Karlsruhe was needed is also due to the state itself: The Federal Finance Ministers Wolfgang Schäuble (CDU), Peer Steinbrück (SPD) and Olaf Scholz (also SPD) watched more or less inactive as well as high-paid lawyers from commercial law firms that gray area took advantage of what the legislature allowed, although he had known for years what was going on. That was disinterest and sloppiness paired with an excessive understanding of banks that benefited from Cum-Ex, but seemed so unstable after the financial crisis from 2007 that they could count on forbearance.
The banks, their lawyers and their customers, which included wealthy private individuals, knew how to take advantage of this.
Your awareness of injustice must have been tremendous, at least subcutaneously.
Why else would you pay millions in fees if you didn't know that it takes special sophistication to enrich yourself at the expense of the general public?
Antisocial behavior
This anti-social behavior, which is also tolerated by the tax authorities, cost the German taxpayers an amount that fluctuates somewhere between 12 and 50 billion euros, nobody knows for sure.
And that's just the damage from cum-ex deals;
that from similar cum-cum deals is possibly even higher.
The judgment is also important for another reason that goes far beyond the specific case: Far too often the German state appears defenseless against all kinds of economic criminals. Then again, his representatives are inwardly just too much in awe of managers who act with chutzpah, charisma and criminal energy. The latter was impressively demonstrated by the Wirecard case.
So it is a shame that Germany, of all places, has long been considered the perfect location for laundering illegally acquired funds. Here in particular, there is a grotesque gap between claims and reality, and those who delve a little deeper into the subject sometimes lack the belief that something will ever change in this regard.
Too often it takes individuals who bite with verve and tenacity into a topic that most others keep their hands off of.
This applies just as much to money laundering as it does to Cum-Ex, where the Cologne public prosecutor's office has been fighting for years that at least initially seemed hopeless.
That the mills of the judiciary grind slowly is annoying.
It is good, however, if they grind at all - and at best achieve results like those in Karlsruhe.
The verdict was overdue, it is historic - and perhaps, one can still dream, the starting point of the comeback of a defensive state that does not let people dance on the nose with friendly faces while they rip off the tax authorities.