April 29, 2022 /
Over the last few decades, Hanno Berger has established himself as an institution in the financial sector. Initially working as a bank auditor, he became a tax lawyer in 1996, advising Germany’s top earners on tax avoidance. According to the indictment, he first learned of the possibility of enriching himself through cum-ex transactions in 2005 through an expert opinion.
The 71-year-old is now accused of “joint tax evasion” , which is said to have begun in 2007. Since then, Berger, together with managers from the Hamburg private bank MM Warburg, Hypo Vereinsbank and a British financial company, is alleged to have committed the cum-ex fraud, in which 12 billion euros were stolen from the state coffers in Germany alone.
Through various offshore accounts, Berger is also said to have lined his own pockets with around 27 million euros.
In the case of share transactions that take place in the period around the dividend distribution date (“cum” = before/with dividend entitlement, “ex” = after/without dividend entitlement), the capital gains tax was refunded by the state several times for the same share through so-called short sales of shares. The state was confused by a construct that was difficult to understand. Across Europe, countries were defrauded of an estimated 55 billion euros, making the cum-ex and cum-cum transactions Europe’s largest and most complicated tax fraud.
The potential perpetrators, including Hanno Berger, argue that the scheme was merely a tax loophole and that they had therefore acted within the law. The BGH takes a different view: in July 2021, the court ruled in a landmark judgment that the actions of two British share traders were intentional, with the aim of obtaining refunds from the tax authorities. The cum-ex fraud therefore constitutes criminal tax evasion.
If convicted, Hanno Berger faces a long prison sentence.
A verdict has now been reached at the Bonn Regional Court. Berger is sentenced to eight years in prison for three counts of tax evasion. The judges’ sentence is below that of the prosecution, who had demanded nine years in prison. The verdict is not yet final.
The Wiesbaden Regional Court has now also sentenced the ex-banker to eight years and three months in prison. In addition, around 1.1 million euros from Berger’s proceeds of crime are to be restituted. The court found him guilty of three counts of tax evasion. The current sentence from Wiesbaden and the conviction in Bonn from December 2022 can subsequently be combined to a total prison sentence of 15 years. The latter is still not legally binding, Berger has appealed.
Sources:
https://www.tagesschau.de/wirtschaft/finanzen/cum-ex-hanno-berger-prozess-bonn-101.html (last accessed on 26.04.2022)
https://www.tagesschau.de/eilmeldung/cum-ex-bgh-urteil-101.html (last accessed on 26.04.2022)
https://www.zeit.de/wirtschaft/2022-04/hanno-berger-cum-ex-prozess-bonn (last accessed on 26.04.2022)
https://www.finanzwende.de/themen/cumex/wie-funktionierten-die-cumex-geschaefte/ (last accessed on 26.04.2022)