Concerns continue to rise around the controversial Cum-Ex tax fraud practices, with experts warning of their persistent existence even years after regulatory changes aimed to eliminate them. Anne Brorhilker, once Germany’s leading investigator of the Cum-Ex scandal, has voiced strong beliefs concerning the illicit dealings still taking place, emphasizing the alarming trend of tax fraud against German taxpayers.
Brorhilker, who served as the chief prosecutor on Cum-Ex cases from 2013 until her departure from public service earlier this year, stated, "Cum-Ex runs on - even long after the law change of 2012." This statement encapsulates the core issue as many financial institutions purportedly continue to exploit loopholes left by legislation. The Cum-Ex phenomenon reached its apex between 2006 and 2011 and has been labeled the largest tax scam in Germany's history. The scheme allowed banks and investors to engage in stock trading maneuvers around dividend dates, leading to refunds for taxes never paid, costing the government at least ten billion euros.
Despite major reforms enacted to thwart such practices, Brorhilker is adamant: “The likelihood of Cum-Ex deals and related Cum-Cum deals being conducted today is, according to her assessment, high.” Various reports indicate how these investment frauds are still prevalent, asserting many financial institutions contribute to the encroaching problem by manipulating systems across different European jurisdictions.
"The banks know: No one can prove it to us," Brorhilker added, as the risk for banks embroiled in illicit activities remains exceedingly low. She underscored significant shortcomings within regulatory measures, pointing out how financial institutions can continue evading scrutiny. One of her key assertions highlights the need for the banking sector to maintain data transparency within Germany instead of transferring sensitive information to low-regulation countries.
Despite the government’s efforts to address these issues, accountability remains elusive. To date, only 3.1 billion euros of the missing sums have been reclaimed, as cited by the Federal Ministry of Finance by end of 2023. With 380 active investigations still underway, Brorhilker criticized the glacial pace of recovery efforts. She claims insufficient collaboration between relevant governmental bodies has hampered progress, pushing for the establishment of designated authorities to centralize the fight against economic crimes.
"We allow international investment banks to rob us," she declared, highlighting the urgency of reform as she lamented the increasing influence these institutions wield on the fiscal health of the nation. Without swift intervention and emphasis on accountability, Brorhilker fears many fraud cases may expire due to statute limitations, resulting in substantial taxpayer losses.
Despite the setbacks, there have been advances: the German Federal Court affirmed in 2021 the unequivocal legal stance against Cum-Ex transactions as tax evasion. This ruling marked significant progress amid growing public outrage toward the scandal, which has reached the highest political echelons, with allegations even casting shadows over high-ranking officials.
Overall, the struggles against these crimes remain fraught with difficulty, but with voices like Brorhilker's championing transparency and regulatory reform, there exists hope for turning tables on these exploitative practices. The outcry for greater scrutiny and the establishment of dedicated economic crime units could signal the dawn of more rigorous enforcement against tax fraud.