Berlin blasts 'illegitimate' bank transactions that evade taxes
Berlin on Wednesday blasted "illegitimate" financial operations carried out by banks such as Commerzbank, which are aimed at helping foreign investors shortchange the state of taxes.
"These operations maybe legal, but I don't consider them legitimate," said Finance Minister Wolfgang Schaeuble.
The operations, called "cum/cum" in financial jargon, help a foreign investor pay less taxes on dividends through a temporary transfer of the investor's German shares to a German bank.
Foreign investors are subjected to a withholding tax levied by Germany on dividends earned on their German stocks. But to circumvent the flat 15-percent levy, they simply transfer their holdings to a bank such as Commerzbank, which benefits from a more favourable domestic investor regime.
German media this week reported that the state may have lost out on around one billion euros ($1.2 billion) a year since 2011 owing to such operations.
A spokeswoman at the finance ministry did not confirm the figure, but said the issue will also be raised with Commerzbank, in which the state still has a 15-percent stake after a 2008 bailout.
"We consider these operations illegitimate as their purpose is to evade taxes on dividends," she added.
In a statement, Commerzbank said it carries out 100,000 financial transactions daily, and that "in this context, we are inevitably confronted with so-called cum/cum situations".
"Through our internal system and controls, we assure that all the transactions conform to the applicable laws," it added.
A draft law banning cum-cum operations has yet to be put to parliament, but if approved, it will be retroactive from January 1, 2016.
© 2016 AFP