In the fight against organized tax fraud such as "Cum-ex", the state government of North Rhine-Westphalia (NRW) wants to tighten up criminal tax law.

According to FAZ information, the CDU and FDP agreed on Tuesday afternoon at the cabinet meeting in Düsseldorf to submit a draft law aimed at amending the Fiscal Code (AO).

Tax evasion is shown in paragraph 370 AO, which is the central allegation of the criminal prosecution authorities against the more than 1350 suspects in the cum-ex transactions.

Marcus Young

Editor in Business.

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"The prosecutors are faced with a tax scandal of unprecedented proportions at Cum-ex, an international network of bankers and financial experts who have formed a tax evasion industry for years," said Peter Biesenbach (CDU), Minister of Justice of North Rhine-Westphalia.

From the point of view of the state government, a change is absolutely necessary because the legislator assumed “completely different forms” of organized white-collar crime when the standard was last amended more than a decade ago.

At least seven billion euros in damage

The financial authorities were deliberately deceived in the stock group transactions of banks, brokers and short sellers around the dividend date.

There were multiple reimbursements of a capital gains tax that had only been incurred once - the tax authorities suffered damage of at least seven billion euros, more recent estimates assume a significantly higher sum.

Biesenbach is concerned that the tax code in its current form "does not do justice" to the extent of the cum-ex tax scandal.

"According to the legislator's assessment, the gang-like evasion of capital gains taxes - and that's what the cum-ex proceedings are about - does not currently constitute a particularly serious case.

The differentiation is unacceptable.”

Expressed in numbers: So far, the accused only faced the higher penalty of up to ten years imprisonment when it came to sales or excise taxes - which is the case with organized cigarette smuggling or sales tax carousels.

The government of North Rhine-Westphalia wants to extend organized tax evasion to all types of taxes;

if the application is approved in the Bundesrat and Bundestag, future charges against cum-ex profiteers could provide for significantly stricter penalties.

More powers for investigators

In addition, the proposal provides for more possibilities for telecommunications surveillance of suspects in order to enable better investigation while maintaining proportionality.

At the instigation of Biesenbach, the Federal Council passed a decision in almost the same way in November 2020 and forwarded it to the former federal government.

However, the project was not taken up in the run-up to the 2021 federal election.

Therefore, the application is brought in again, emphasized Biesenbach on Tuesday in Düsseldorf.

"The state government in North Rhine-Westphalia is staying tuned and not leaving the field to the cum-ex string pullers."