Cum/Ex Convictions- Implications For Financial Institutions In The UK

German papers have called it the most complicated tax fraud trial in modern German history, but the “Cum-Ex” scandal could have implications for the entire financial services industry. Litigation & enforcement partners and attorneys Judith Seddon, Rosemarie Paul, Paige Berges and Chris Stott, along with Tax partners Kat Gregor and Andrew Howard team up with Sarah Wrigley, Derek Patterson, Anant Modi, Rob Mason and Simon Taylor of Forensic Risk Alliance, to discuss a recent conviction in a German court in what is described as the “biggest tax swindle in the history of Europe”, and its implications for financial institutions in the UK. The authors describe the specifics of this case, the tax evasion offences at hand, and touch upon a potential ripple effect throughout the finance industry.

On 19 March 2020, a German court found two former London-based bankers guilty of tax evasion offences in the first criminal trial related to “Cum Ex” trades.1 They received suspended sentences totalling 34 months, in light of their extensive cooperation with prosecutors. They and a Hamburg-based bank involved with the transactions are also reported to have been required to repay over EUR 190 million in illegally obtained earnings.

What is a Cum Ex trade?

Described as thebiggest tax swindle in the history of Europe,Cum Ex transactions involve multiple reclaims for a single payment of dividend withholding tax.2...