A criminal trial against one of the key figures in Germany’s ongoing “cum-ex” tax scandal began on Thursday before a court in the western German city of Bonn.
German lawyer Kai-Uwe Steck is accused of eight counts of serious tax evasion between 2007 and 2015, allegedly resulting in tax losses for the German government totaling €428 million ($450 million).
Steck was the law partner of the lawyer Hanno Berger, who was considered the driving force behind illegal cum-ex transactions in Germany. Berger has been convicted for his role in the scandal and is currently serving a prison sentence.
Steck, 53, played a key role in the prosecution of figures involved in the “cum-ex” scheme. He admitted his role in 2016 and became a key witness in many cases.
If he is convicted, his role as a key witness may reduce the sentence.
In a fraudulent scheme, financial investors swap shares of stock back and forth between dividend payment dates to take advantage of an apparent loophole in the tax code.
Germany has been hit hard by this scandal, although other countries are also involved in this process.
By exchanging shares with (“cum”) and without (“ex”) dividends back and forth, the players in the system were able to get tax money back from the German government – despite having never paid taxes in the first place.
Estimates put the total loss to the German government from the program in the tens of billions of euros.
This program grew in popularity between the years 2006 to 2011. Revelations of the aggressive use of the “cum-ex” system by wealthy investors outraged German society and caused a major scandal.
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