dw.com
Cum-Cum Tax Schemes Cost Governments Over €140 Billion
Tax schemes known as "cum-ex" and "cum-cum" have cost Germany an estimated €29 billion between 2000 and 2020, with global losses exceeding €140 billion, due to a legal loophole that allows financial institutions to claim multiple tax refunds on dividend payments.
- How do "cum-cum" tax schemes exploit legal loopholes, and what specific legislative changes are proposed to address them?
- The core issue is a legal loophole enabling "cum-cum" transactions, where the lending of shares for short periods around dividend payments allows for fraudulent tax reclaims. This loophole exists because share lending isn't taxed, unlike in countries where such transactions are impossible due to taxation of share lending. Experts advocate for closing this gap through legislative changes.
- What are the immediate financial consequences of the "cum-cum" tax schemes, and how significantly do they impact national budgets?
- Cum-ex" and "cum-cum" tax schemes have cost Germany an estimated €29 billion between 2000 and 2020, with global losses exceeding €140 billion. These schemes exploit loopholes in dividend tax laws, allowing financial institutions to claim multiple tax refunds. This has resulted in significant revenue loss for numerous countries, including Germany, Belgium, Luxembourg, France, Italy, the Netherlands, and Austria.
- What are the long-term implications of insufficient regulatory action and the financial sector's lobbying influence on the fight against "cum-cum" tax fraud?
- Future implications include continued revenue loss for governments unless legislative changes are enacted to close the identified legal loopholes. The significant lobbying efforts by the financial sector, spending nearly €40 million annually, hinder effective regulation. Furthermore, understaffed and ill-equipped tax authorities struggle to combat this sophisticated tax fraud, requiring improved coordination and resources.
Cognitive Concepts
Framing Bias
The framing emphasizes the scale of the financial losses and the ineffectiveness of government responses. The use of phrases like "enormous amounts," "many countries are losing billions," and "little is done against it" sets a tone of alarm and criticism of authorities. The inclusion of quotes from experts and a former prosecutor further strengthens this critical perspective.
Language Bias
The language used is generally factual but leans towards critical assessment of the authorities. Words like "inadequate," "totally counterproductive," "deficient," and "poorly positioned" carry negative connotations. While these descriptions are arguably justified based on the information presented, more neutral alternatives could be explored to maintain objectivity. For example, instead of "deficient equipment," one could write "limited resources.
Bias by Omission
The article focuses heavily on the German perspective and the actions (or inaction) of German authorities. While it mentions other affected countries (Belgium, Luxembourg, France, Italy, Netherlands, and Austria), it lacks detailed analysis of their responses or the specific scale of their losses. This omission limits a comprehensive understanding of the cum-cum scheme's global impact and the varying approaches to tackling it.
False Dichotomy
The article doesn't present a false dichotomy in the traditional sense of an oversimplified eitheor choice. However, it implicitly frames the issue as a battle between the financially powerful lobbying groups and under-resourced, inefficient government agencies. This simplification might overshadow other potential contributing factors or solutions.
Sustainable Development Goals
The article highlights massive tax fraud schemes (cum-ex and cum-cum) leading to billions of euros in losses for German and other European countries' governments. This siphoning of public funds exacerbates economic inequality by disproportionately impacting public services and social programs that benefit lower-income populations. The weak regulatory response and influence of financial lobbying further contribute to this inequality by protecting the perpetrators and hindering effective legal action.