A leading German tax expert is urging the new federal government to intensify efforts to combat so-called “cum-cum” share transactions, which are estimated to have cost the state billions of euros.
Professor Christoph Spengel, a prominent tax law academic, criticized what he perceives as downplaying of the issue by policymakers. In an interview with the Süddeutsche Zeitung, Spengel stated that these transactions have potentially resulted in damages exceeding 25 billion euros. “The claim that the situation is under control and the damage isn’t as significant, is frustrating. It cannot simply be dismissed” he said.
Spengel is particularly critical that cum-cum deals remain possible despite what he considers relatively straightforward preventative measures. He is appealing to the government to take legislative action and close existing loopholes. He finds the political reluctance particularly perplexing given current budgetary constraints, noting that the previous government collapsed over a dispute regarding five billion euros, while billions are allegedly lost annually through tax evasion. He deems failing to prioritize this issue “extremely negligent.
Cum-cum transactions allow foreign investors, with the assistance of German financial institutions, to claim refunds on capital gains taxes to which they are not entitled. While the federal government estimates the damages at over seven billion euros, Spengel calculates the figure to be nearly 28.5 billion euros. He draws parallels to the widely publicized “cum-ex” scandal, recalling that the scope of that issue was initially minimized. The cum-ex scandal occupied media and the justice system for over fifteen years, brought scrutiny on former Chancellor Olaf Scholz and led to several convictions. Spengel previously served as an expert witness in the parliamentary inquiry committee investigating the cum-ex affair, assessing the scale of the damages in 2016.