Germany’s second biggest lender in tax evasion probe

tax evasion probe

22nd November 2017

As officials across the globe seek to take action against fraudulent tax activity it would appear that even those with high levels of financial knowledge and experience are unable to hide from the law. According to recent reports, authorities in Germany have begun a tax evasion probe into a number of current and former managers of the country’s second largest lender.

Authorities in tax evasion probe

According to reports published by legal news agency Juve earlier this month, prosecutors, federal crime police and tax officials conducted a number of searches including the private homes of managers connected to Commerzbank.

This activity forms part of investigations into suspected tax evasion allegedly worth 40 million euros. Reports suggest the bank is co-operating with the authorities and in a statement released after the news broke, Commerzbank revealed that it had voluntarily conducted its own investigation into possible dividend stripping back in 2015. The results of this investigation have apparently already been passed on to the relevant authorities.

Dividend stripping  

Those caught up in these allegations apparently used a system known as dividend stripping, taking advantage of an old legal loophole which has now been closed in Germany. By purchasing stock just before losing rights to a dividend and then quickly selling it on, both the buyer and seller were previously able to claim tax credits.

Authorities have been clamping down on such activity in the country for several years, with a number of banks already paying hundreds of millions of euros in back taxes for dividend stripping. It’s believed that this loophole has cost the state billions.

The law will always catch up with you

While investigations are on-going, those seeking tax evasion schemes should take note of this example. Despite using a legal loophole those involved in dividend stripping are now facing investigations and in some cases large settlements for historical activity. As such, while you might think you can get around existing systems, behaviour such as this could still land you in hot water further down the line.

For recruiters placing contractors across the globe, it can be difficult to stay ahead of the changing employment regulations overseas. And with tax and compliance varying country to country, it can be a real minefield to navigate. At 6CATS International we have a wealth of experience in international contractor management solutions, so why no let us handle this complex job and free up your time to do what you do best? Contact us today.


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