JPMorgan Chase has become the latest bank to be raided by prosecutors in Germany as part of an investigation into the multibillion “cum-ex” tax evasion scandal.
The raid on the bank’s Frankfurt office by Cologne prosecutors is the latest step in a sprawling investigation into the dividend tax scandal, which dates back more than a decade. Prosecutors and police in Germany have this year also raided the offices of foreign lenders Barclays, Bank of America and Morgan Stanley.
“We can confirm that our Frankfurt offices were visited this week. We continue to co-operate with the German authorities on their ongoing investigation,” the US bank said on Wednesday.
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The Cologne Public Prosecutor’s Office said that it has been executing search warrants against an unnamed banking institution in the city, as well as separate audit firms and searching the homes of four suspects, all in relation to cum-ex tax evasion schemes.
The fraud, which took advantage of a flaw in the German tax code, is estimated to have cost the continent’s taxpayers more than €10 billion. It involved share deals executed before and after a stock’s dividend payment that duped governments to reimburse taxes that were never paid in the first place.
Illicit tax refunds
In Germany, tax authorities refunded at least €3.9 billion in illicit tax refunds between 2001 and 2011, according to the finance ministry.
The fraud has been dubbed cum-ex, which is derived from Latin meaning “with without”, and refers to the disappearing nature of the dividend payments.
The raids in Frankfurt, which were first reported by Bloomberg, are being carried out to locate emails and written correspondence, the Cologne prosecutors added.
More than 50 investigators and IT experts from the local police and tax investigation offices are also involved in the operation. — Copyright The Financial Times Limited 2022
