German Cum-Ex Tax Probes Challenged at Human Rights Court

(Bloomberg) -- German probes of controversial “Cum-Ex” tax deals that have ensnared dozens of banks may be reviewed by the European Court of Human Rights after one of the prime suspects in the scandal asked the tribunal to intervene.

Hanno Berger, a German lawyer charged with aggravated tax evasion, asked the court to throw out evidence from raids of his home and offices, the Strasbourg-based tribunal said in an emailed statement on Wednesday.

Once Germany’s most profitable tax attorney, Berger is fighting allegations that the Cum-Ex transactions he worked on were illegal. He’s one of six people charged in a Wiesbaden court for allegedly getting improper refunds on trades that were valued at 15.8 billion euros ($18 billion), costing tax authorities 106 million euros, according to the indictment.

Three former London-based investment bankers at UniCredit SpA’s HVB unit who according to prosecutors cooperated with Berger are also charged in the case. Prosecutors depict Berger as the brains behind the tax strategy that crossed the line to tax evasion.

Berger worked as a lawyer for Rafael Roth Financial Enterprises GmbH, an investor who wanted to buy shares, and only as part of this mandate did he contact the people who handled the trades at HVB, his spokesman said in an emailed statement.

Prosecutors in Cologne are also looking at the issue and are investigating the role of dozens of banks, brokerages, accounting companies, and law firms in the deals, people familiar with the matter said earlier this year.

Cum-Ex transactions involved short sales just before dividend time. Companies withheld taxes on dividends and custodian banks issued certificates that shareholders could redeem at the tax office. In the short sales, the buyer’s bank also issued a certificate, so that a tax paid only once could be reclaimed twice. Germany amended laws in 2012 to end the practice. Prosecutors in Frankfurt, Cologne and Munich have opened multiple probes.

In March 2017, Germany’s top court backed the raids in Berger’s case, saying the searches were compatible with the country’s constitution and upholding a lower tribunal’s finding that there was “a suspicion of especially grave tax evasion.” Berger was trying to have the judges stop prosecutors from using documents seized during raids. He now hopes he’ll get that remedy form the European Court of Human Rights.

Berger, in his earlier career a highly regarded Frankfurt tax official dealing with banks, became a tax lawyer in 1996, working for international law firms before founding his own one in 2010. His offices were located in Frankfurt’s Skyper building. Prosecutors raided them in November 2012. One day later, Berger moved to Switzerland where he still lives.

The case is: Berger v. Germany, 69158/17.

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