It is said that the history of tax avoidance is as long as the history of tax. One of the latest tax avoidance strategies, which has seemingly crossed the line to illegal tax evasion, is that of “Cum-Ex” share trading, sometimes referred to as “dividend stripping.” For the past few years, German authorities have led the investigation into the practice and many other European countries are now embarking upon enquiries of their own. It is estimated that tax losses to European treasuries resulting from “Cum-Ex” schemes run to more than EUR 50 billion (more than USD 60 billion).

The German lawyer purported to have formulated the practice has challenged his indictment by German authorities for aggravated tax evasion in the European Court of Human Rights. Most recently, the administrator for a now-defunct German subsidiary of a foreign bank has filed a suit against an international law firm, seeking damages for incorrectly opining as to the legality of the trades. That action has precipitated another probe by German authorities into whether the law firm in question may be guilty of aiding and abetting tax fraud. It seems likely that other professional advisers will be subject to similar scrutiny. Continue Reading