Major banks in tax scam and Germany sat on news

Finnish readers will recall that the present government has been pushing for a change in the regulation for the shareholder register for foreign owners. 

In Finland, all Finnish shareholders are listed transparently to the tax authorities if they care to look at the shareholder register. 

However, if a shareholder, Finnish or otherwise, choses to hold his shares in a company or in any other body outside Finland then such holdings will be registered in an anonymous shareholder register of the bank or broker. This appears to be the result of an EU Directive for some strange reason, probably because of intense lobbying by banks.

According to media reports, the German authorities are investigating tax-driven share transactions, which took place around the dividend payment dates. These transactions were executed by banks between 2001 and 2011 trading on their own account or on behalf of third parties. 

There are 2 types of transactions:

  1. “Cum-Ex” deals involve the purchase of shares with (Cum) dividends due on or just before the dividend record date and delivery of these shares after the dividend payment date without (Ex) dividends, which made it possible to obtain multiple returns of capital gains tax that had only been paid to the German tax authorities once. 
  2. The other type is the “Cum-Cum” deal, which involves the short-term transfer and lending of shares owned by a foreign company or investors to a domestic German bank, which subsequently applied for a tax refund on the dividend, which would not have been available otherwise to the foreign company or investor.

It turns out that a former tax expert, who worked previously for the German tax authorities, found this wonderful solution of cheating governments, claiming that it was legal! 

The banks and the investor must have known that the government was paying a tax rebate twice otherwise why would they have made these deals – any fool knows that this is fraudulent.

Not only do the banks claim that it was legal, but it turns out that the scale of the fraud was huge – as much as €55 billion of taxes has been reported lost since 2001. 

The schemes were first uncovered in Germany in 2012 but not openly revealed by the Germans until many years later. Recent investigations found evidence of the practices in France, Spain, Italy, the Netherlands, Denmark, Belgium, Austria, Finland, Norway and Switzerland.

You can read a full article on this link with details of how Finland and other countries may be involved.

Let’s see what our government and the European Banking Authorities have to say about this since there has been no official reporting on this matter so far in Finland. 

It looks like somebody has been sleeping at the helm again. Bank management should be punished for such fraudulent activities, not just given a slap on the wrist and a fine that their customers will end up paying with higher costs.

Site Footer