The entire thing is a fucking farce. There was a huge German article on this which was a collaboration between a number of respected German newspapers, it went into detail how the thing worked,...
The entire thing is a fucking farce. There was a huge German article on this which was a collaboration between a number of respected German newspapers, it went into detail how the thing worked, and how the sequel to the cum-ex strategy (called cum-cum) made them even more money. I hope someone goes to prison for this, but the damage is done and I doubt we'll see any meaningful reparations done.
It's unclear how cum-cum schemes would be nearly as profitable. They seem to be traditional tax avoidance, and thus could only take as much tax as was paid, at worst. Cum-ex schemes, on the other...
and how the sequel to the cum-ex strategy (called cum-cum) made them even more money.
It's unclear how cum-cum schemes would be nearly as profitable. They seem to be traditional tax avoidance, and thus could only take as much tax as was paid, at worst.
Cum-ex schemes, on the other hand, involve actually being reimbursed multiple times for the same tax payment, and thus could actually receive more than the paid tax.
Sources used by the various newspaper reporting on this state that the Cum-Cum strategy cost the German state between 49,2€ and 82€ milliards and Cum-Ex at minimum 7,9€ milliards. (Sources in...
Sources used by the various newspaper reporting on this state that the Cum-Cum strategy cost the German state between 49,2€ and 82€ milliards and Cum-Ex at minimum 7,9€ milliards. (Sources in German). However this may be purely because Cum-Cum has been going on for longer, I'm not financially literate enough to dispute anything here, only repeating in English what a trusted German source says.
I am financially illiterate - can anyone else comment on this knowledgeably? What is the best way to prevent this kind of fraud? Like the GFC, was it caused by a lack of regulation in the...
I am financially illiterate - can anyone else comment on this knowledgeably?
What is the best way to prevent this kind of fraud?
Like the GFC, was it caused by a lack of regulation in the financial sector?
Seeing the basic process, I think that these types of cum-ex schemes could actually be seen as tax procedure equivalents of a software exploit, attacking a security flaw involving information...
Like the GFC, was it caused by a lack of regulation in the financial sector?
Seeing the basic process, I think that these types of cum-ex schemes could actually be seen as tax procedure equivalents of a software exploit, attacking a security flaw involving information discrepancies in the way dividend tax withholding was handled in order to get the same tax payment refunded twice (or more times).
With software exploits, explaining that, for example, you were a legitimate administrator of a system because you gave input to a web form that, through a buffer overflow, caused the system to give you access, would likely be seen as ridiculous. In this case, however, since the software is actually the law, some people are apparently trying to argue just that.
The entire thing was going on for a long time, about 20 years. For many years, it was legal as well, so that didn't help much. I can recommend this article on it (in German, use DeepL to translate...
The entire thing was going on for a long time, about 20 years. For many years, it was legal as well, so that didn't help much. I can recommend this article on it (in German, use DeepL to translate it) which goes into details on how this entire thing works and came to be.
EDIT: What I said was only partially correct. I'll translate the article here; Basically, in Germany foreigners trading shares have to pay a tax, however, Germans pay it as well, but can get the money back later, as they also pay it through income or company tax.
A foreign investor owning German shares approaches a German (usually a German bank), and shortly before the dividents of that share are paid out, sells that share to a native. The native can now demand the tax money back, and the state complies. After the dividents are paid out, the shares are sold back to the original owner. The involved people then split the tax money they got.
Cum-Ex is an evolution of the Cum-Cum scheme where you can get the tax money back multiple times by trading the shares incredibly quickly around the time the dividents are paid out. This means that the tax rebate is aquired multiple times for a single share. The article I linked states that taxes were paid back by the state up to ten times for a single share.
As the article didn't clearly explain the actual process, I eventually managed to find this document, which outlines the basic processes for cum-ex and cum-cum trades in a German context, and...
As the article didn't clearly explain the actual process, I eventually managed to find this document, which outlines the basic processes for cum-ex and cum-cum trades in a German context, and which likely applies to countries with similar tax laws.
The entire thing is a fucking farce. There was a huge German article on this which was a collaboration between a number of respected German newspapers, it went into detail how the thing worked, and how the sequel to the cum-ex strategy (called cum-cum) made them even more money. I hope someone goes to prison for this, but the damage is done and I doubt we'll see any meaningful reparations done.
It's unclear how cum-cum schemes would be nearly as profitable. They seem to be traditional tax avoidance, and thus could only take as much tax as was paid, at worst.
Cum-ex schemes, on the other hand, involve actually being reimbursed multiple times for the same tax payment, and thus could actually receive more than the paid tax.
Sources used by the various newspaper reporting on this state that the Cum-Cum strategy cost the German state between 49,2€ and 82€ milliards and Cum-Ex at minimum 7,9€ milliards. (Sources in German). However this may be purely because Cum-Cum has been going on for longer, I'm not financially literate enough to dispute anything here, only repeating in English what a trusted German source says.
EDIT: You're right yes.
I am financially illiterate - can anyone else comment on this knowledgeably?
What is the best way to prevent this kind of fraud?
Like the GFC, was it caused by a lack of regulation in the financial sector?
Seeing the basic process, I think that these types of cum-ex schemes could actually be seen as tax procedure equivalents of a software exploit, attacking a security flaw involving information discrepancies in the way dividend tax withholding was handled in order to get the same tax payment refunded twice (or more times).
With software exploits, explaining that, for example, you were a legitimate administrator of a system because you gave input to a web form that, through a buffer overflow, caused the system to give you access, would likely be seen as ridiculous. In this case, however, since the software is actually the law, some people are apparently trying to argue just that.
The entire thing was going on for a long time, about 20 years. For many years, it was legal as well, so that didn't help much. I can recommend this article on it (in German, use DeepL to translate it) which goes into details on how this entire thing works and came to be.
EDIT: What I said was only partially correct. I'll translate the article here; Basically, in Germany foreigners trading shares have to pay a tax, however, Germans pay it as well, but can get the money back later, as they also pay it through income or company tax.
A foreign investor owning German shares approaches a German (usually a German bank), and shortly before the dividents of that share are paid out, sells that share to a native. The native can now demand the tax money back, and the state complies. After the dividents are paid out, the shares are sold back to the original owner. The involved people then split the tax money they got.
Cum-Ex is an evolution of the Cum-Cum scheme where you can get the tax money back multiple times by trading the shares incredibly quickly around the time the dividents are paid out. This means that the tax rebate is aquired multiple times for a single share. The article I linked states that taxes were paid back by the state up to ten times for a single share.
As the article didn't clearly explain the actual process, I eventually managed to find this document, which outlines the basic processes for cum-ex and cum-cum trades in a German context, and which likely applies to countries with similar tax laws.