Another 110 million transferred: Warburg pays cum-ex tax debts

Thursday January 14, 2021

Another 110 million transferred
Warburg settles cum-ex tax debts

For a long time, a lot of money could be made with dodgy stock deals around the dividend payment day. In Hamburg, the Warburg Bank is at the center of the scandal. But she sees herself wrongly in a bad light. She pays back taxes, but wants to get the money back.

Warburg-Bank, involved in the Cum-Ex scandal, claims to have paid all tax claims. After the group had already paid around 44 million euros to the tax office for large companies in Hamburg in April 2020, another 111 million euros had now been transferred at the end of 2020, the bank in Hamburg announced. The money was made available by the two main shareholders of the Warburg Group.

With the payments totaling 155 million euros, "the taxes set by the tax office for the years 2007 to 2011 due to the so-called cum-ex share transactions of the Warburg Bank have been paid in full," emphasized the bank. The collection of taxes ordered by the Bonn Regional Court in March 2020 is now done. The bank emphasized that it had now paid the entire tax amount on its own, "although third parties initiated and processed the business and made large profits, while the Warburg Group never intended to wrongly benefit from tax credits".

Accordingly, the bank still does not share the tax assessment of the authorities, according to which it is to be claimed primarily and solely for all tax claims – and continues to take legal action against the tax assessments. "Claims for damages have now been filed against the initiators, liquidators and profiteers of the business," said the bank.

U committee examines the role of the Hamburg SPD

Various banks, investors and tax law experts have been involved in controversial cum-ex tax deals for years. These transactions resulted in billions in damage to the treasury. In cum-ex deals, stock traders staged a confusion with the tax authorities with stocks with ("cum") and without ("ex") dividend entitlements. Investors have a capital gains tax paid once on stock dividends reimbursed several times with the help of banks. For this purpose, these shares were shifted back and forth between several participants around the dividend cut-off date. Tax authorities then reimbursed capital gains taxes that had not been paid.

The cum-ex scandal and the tax treatment of the Warburg Bank also occupy a parliamentary committee of inquiry of the Hamburg citizenship. The committee was constituted in November and is supposed to clarify a possible influence of leading SPD politicians in the tax proceedings in favor of the Hamburg private bank.

The background to this are meetings between the then mayor and current Federal Minister of Finance, Olaf Scholz, in 2016 and 2017 with Warburg co-owner Christian Olearius, against whom investigations were underway on suspicion of serious tax evasion in connection with cum-ex deals. Hamburg later allowed possible additional tax claims in the amount of 47 million euros to be statute-barred, and a further 43 million euros was only claimed after the Federal Ministry of Finance intervened.

Both Scholz and his successor in the town hall, Peter Tschentscher (SPD), who was Finance Senator at the time, have rejected all allegations in this context. The committee, which has so far only dealt with procedural and personnel issues, is expected to meet for its third meeting in March after having examined the documents requested by the Senate.