Europe’s top banks allegedly helped wealthy clients across the continent steal 55 billion euros ($63 billion) from multiple governments by making tax reclaims to which they were not entitled, an investigation has revealed. The theft centred around a complex scheme of trading stocks that also involved hedge funds and large international commercial law firms.
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Undercover Journalists Uncover ‘the Biggest Tax Swindle in the History of Europe.’
The undercover probe by 37 journalists from 12 countries shows that about a dozen European countries are affected by the tax scandal, but Belgium, Denmark and Germany were hardest hit. France, Italy, the Netherlands, Norway, Spain, Sweden and Switzerland have also seen some damage.
Dubbed the Cumex Files, the investigation reviewed 180,000 secret documents from banks, stock traders and law firms over a period of more than a year. Interviews with anonymous sources and whistleblowers provided extra detail. “They [the secret documents] demonstrated the extent to which banks and investors could reimburse taxes on stock deals that they did not have,” the Files said.
“These windy financial constructs are called cum-cum (cum means ‘dividend’). A domestic bank helps a foreign investor to get a tax refund that they are not entitled to. The profit is shared between the participants.”
A variant of the scheme, called ‘cum-ex’ (without dividend), would see traders refunded twice or, in severe cases, several times, by the state for taxes buyers or sellers of stock would have paid only once. Share ownership is often difficult to point out because of the complex structure of the schemes, which constitute a form of tax evasion or avoidance.
Both cum-cum and cum-ex went on for decades unnoticed due to different regulations within European Union member countries.
Mixed forms have emerged, the report says, “and new, even more aggressive mutations for which there are no names yet.” The investigative journalists claim that they have uncovered “the biggest tax swindle in the history of Europe.”
“It was a trade that was initially discovered by chance,” a separate video of the Cumex Files detailed. “Yet a group of masterminds turned it into an industrialized cottage industry, from Dubai to London, New York to Dublin taking billions of euros out of the pockets of European tax payers,” it said.