Key figure in German Cum-Ex tax scam jailed

WIESBADEN – The key figure in Germany’s Cum-Ex tax scandal, Hanno Berger, 72, has been sentenced to a total prison term of eight years and three months after being found guilty on three counts of tax evasion, the Wiesbaden Regional Court ruled on Tuesday.

In addition, criminal proceeds of almost €1.1 million ($1.2 million) are to be confiscated from Berger’s assets.

The Frankfurt Public Prosecutor’s Office had accused Berger of having participated in complex share deals from 2006 to 2008, which led to unjustified tax refunds of €113 million.

In the deals brokered by Berger, DAX shares worth €15.8 billion were traded via former employees of the lender Hypovereinsbank. The person who profited was a real estate investor who has since died. The profits were divided up.

The maximum possible sentence that Berger could have received was 15 years. The prosecution had demanded a prison sentence of 10 years and six months, the defence had pleaded for Berger’s acquittal.

Berger is the best-known figure in the business model that the Federal Supreme Court ruled was a criminal offence in 2021. He advised banks, funds and investors on the construction of the cum-ex deals and recruited wealthy clients through his network. For this he collected millions.

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Once he was a civil servant in the tax administration of the federal state of Hesse, where Germany’s financial hub of Frankfurt is located, later he changed sides and became a self-employed tax lawyer.

Berger had repeatedly denied the accusations and considered himself a victim of a judicial scandal.

Berger did not invent the business model in which shares with (cum) and without (ex) dividend entitlement were shifted around the dividend record date and taxes not paid were refunded.

However, it is considered to have paved the way for the practice to be operated on a large scale in Germany. Because of the deals, which had their peak phase between 2006 and 2011 and were widespread among banks, the German state lost out on an estimated €10 billion at least. In 2012, the tax loophole was closed.

Berger had evaded German justice for years by fleeing to Switzerland. He was extradited in February 2022 and sentenced to eight years in prison last December at the Bonn Regional Court.

With Tuesday’s verdict in Wiesbaden, a total sentence of up to 15 years can be formed by retrospective order. However, the Bonn verdict is not yet legally binding. Berger has filed an appeal against it with the Federal Supreme Court.