Luxembourg still in the dark about CumEx deals


Luxembourg still in the dark about CumEx deals

Tax fraud

Finance ministry rejects previous estimates of taxman losing out on €2.2 billion between 2000 and 2020

Finance ministry rejects previous estimates of taxman losing out on €2.2 billion between 2000 and 2020

Luxembourg's Finance Ministry
Luxembourg’s Finance Ministry

Photo credit: Gerry Huberty

Luxembourg’s tax authorities still have no way of distinguishing between legitimate tax refunds and those paid to CumEx traders who have made fortunes re-claiming taxes they never paid in the last 20 years, the finance ministry said.

The Luxembourg taxman lost out on €2.2 billion euros in the last two decades – considerably higher than the previous estimate of €10 million, German investigative platform Correctiv reported in October, basing its estimates on calculations by tax experts at the University of Mannheim.

Luxembourg’s finance ministry rejects that figure, Finance Minister Pierre Gramegna said in response to a parliamentary question this week, but did not provide an estimate of their own for the damage incurred by the state.

CumEx fraud involves a network of traders who lend each other shares just before a dividend payment so that each of them can fraudulently benefit from tax benefits. Correctiv has compared the practice to child benefit fraud in which children are registered with several families at the same time.

The practice went unnoticed for years as regulators and tax authorities could not distinguish between legitimate tax refunds and those claimed through CumEx deals.

Gramegna declined to say whether the state has launched legal proceedings to claim back money lost through such trades, according to the parliamentary question posed by Pirate Party MP Sven Clement.  

The total loss of tax revenue in 12 countries – including Germany, France and Belgium – is estimated to be €150 billion, Correctiv said in October, almost three times the original amount that the platform reported in 2018 when it broke the Cum-Ex scandal. The German taxman alone has been defrauded of €36 billion.


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