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Germany’s Cum-Cum scandal has entered a decisive phase. The federal government now puts the potential fiscal damage at €7.5 billion tied to identified cases, yet only €226.7 million has been reclaimed so far. Authorities report 81 cases legally concluded and 253 suspected cases still under review with an estimated volume of €7.3 billion. The Greens accuse the coalition of moving too slowly, while the Finance Ministry defends ongoing audits and coordination with the Länder tax authorities and the Federal Central Tax Office. Independent experts warn the true loss may be much higher.
Cum-Cum scandal damage estimates and the wider gap
The official €7.5 billion figure reflects concrete files under investigation. Tax scholar Christoph Spengel of the University of Mannheim calculates the loss from Cum‑Cum transactions at €28.5 billion for Germany, and academic estimates cited by investigators put the worldwide damage from Cum‑Ex and especially Cum‑Cum at more than €140 billion. Former Cologne senior prosecutor Anne Brorhilker, who pursued landmark dividend‑arbitrage cases, says insider witness testimony indicated that such trades continued for years and still occur in multiple jurisdictions.
Beyond Germany: a European exposure
According to practitioner accounts referenced by investigators, similar structures have affected Belgium, France, Italy, Austria, the Netherlands, Spain and Luxembourg. The cross‑border footprint complicates audits: refunds are claimed in one state, share lending and cash flows occur in another, and beneficial ownership is shifted around record dates. National authorities stress that they depend on timely data from foreign counterparts to block improper refunds.
How the Cum-Cum mechanism exploits a loophole
Cum‑Cum trades center on the dividend record date. Foreign holders of German shares lend them briefly to a German entity that is entitled to reclaim withholding tax on dividends. After the reclaim is filed, the shares flow back to the foreign investor, and the profit from the refund is split. The critical gap, experts argue, is that the securities lending fee is not taxed as a rule in Germany, keeping the structure profitable. Where countries tax these lending fees, Cum‑Cum trades lose their edge. Spengel has urged a straightforward legal change to tax the fee and tougher pre‑refund verification before the tax office pays out.
Cum-Cum scandal and enforcement capacity
Brorhilker highlights structural enforcement weaknesses: chronic understaffing in tax audits, frequent rotation that dilutes specialist know‑how, and outdated IT tools. Even basic coordination can stall when agencies operate incompatible email encryption or video systems. Cross‑border requests are slow, while strict professional‑secrecy shields in major financial centers make it harder to access advisory files. These constraints raise the detection risk only modestly for sophisticated market actors.
Lobby pressure and the rulebook
Civil society group Finanzwende points to intensive lobbying around financial‑market rules. By its tally, the finance industry spends close to €40 million a year on advocacy in Berlin, employing hundreds of lobbyists. The group warns of potential conflicts of interest when lawmakers hold remunerated roles in local banking boards. Former Schleswig‑Holstein finance minister Monika Heinold recalls sustained attempts by lobbyists to soften legislation or to delay stricter oversight.
Law changes: paperwork relief collides with evidence needs
The Fourth Bureaucracy Relief Act of October 2024 shortened statutory record‑retention periods from ten to eight years. Because shorter periods risked erasing evidence for Cum‑Cum audits, the government postponed the cut by one year for financial institutions. Finance Minister Lars Klingbeil also announced he would prolong retention for documents relevant to Cum‑Cum probes to secure files needed for recovery actions. Critics argue that any broad documentation relief benefits sophisticated actors who rely on opacity, and they call for tailored, long‑duration retention rules for dividend‑arbitrage risks.
Who is implicated: banks, funds — and insurers
The government’s latest status report names breadth as the defining feature of the scandal. A dedicated unit at the Federal Central Tax Office has coordinated nationwide since 2020. To date, 55 banks are listed as directly involved in Cum‑Cum structures. Fourteen insurers admitted they executed Cum‑Cum transactions themselves or were indirectly exposed via funds. Regulated insurers have booked provisions totaling about €71 million for potential tax risks. While 81 proceedings have reached finality, the open case book — 253 suspected cases — dwarfs the sums reclaimed to date.
Political pressure mounts over pace and recovery
The Greens demand a faster legislative fix to the untaxed lending‑fee loophole and more resources for specialist tax units. The coalition replies that investigations are complex and must withstand court scrutiny. For now, the official balance sheet — €226.7 million recovered against billions at stake — fuels calls for stronger pre‑refund controls, automated matching of dividend chains, and mandatory disclosure of securities lending around record dates.
What comes next for the Cum-Cum scandal
Experts outline a compact response. First, tax securities‑lending fees tied to dividend periods and deny refunds where effective taxation is not proven. Second, require beneficial‑ownership proof with real‑time data links before any refund is paid. Third, hard‑wire long retention periods for financial institutions and advisors on dividend‑arbitrage risks. Fourth, expand the BZSt task force, unify secure communications across agencies, and formalize rapid cross‑border channels with partner states. Without these steps, investigators warn, the Cum‑Cum scandal will continue to drain public finances long after the current 253 cases are closed.
