German police make nationwide raids over tax fraud

German prosecutors confirmed Thursday they raided 19 separate locations across the country as part of a massive investigation into so-called "cum-ex" tax fraud.

German police make nationwide raids over tax fraud
Germany's official 'Elster' online tax declaration. Photo: DPA

Frankfurt's public prosecutors office said 181 investigators and tax officials raided 19 offices and private homes located across the states of Hessen, Lower Saxony, Baden-Württemberg and Bavaria on Tuesday, in an operation relating to three separate cases.

The raids are linked to seven individuals suspected of fraud to the tune of 50 million between 2007 and 2011.

So-called “cum-ex” share deals involved multiple cooperating participants exchanging stock in companies amongst themselves around dividend day.

SEE ALSO: Germany calls to 'turn up heat' on financial crimes

Complex changes of ownership allowed them to claim tax rebates on a single payout several times over before sharing out the proceeds.

Used across Europe, this practice cost Germany 7.2 billion, Denmark 1.7 billion and Belgium 201 million since 2001, according to an investigation published last October.

German lawyer Hanno Berger, identified as the mastermind of the scam, has been awaiting trial since last May, along with five former employees of Hypovereinsbank, a subsidiary of Unicredit.

Hypovereinsbank has already agreed to repay 113 million to German tax authorities and pay a fine of €5 million.

Since 2012, Frankfurt prosecutors have launched 10 investigations based on the same kind of fraud involving a total of 815 million in lost tax, of which more than half has been recovered.

As part of the investigation in Germany, several banks have been raided in the past, including Deutsche Bank, which is not in itself under investigation, but several of its former employees are involved in the “cum-ex” affair.

In the sprawling investigation, the German offices of BlackRock, one of the largest asset managers in the world, were also raided last November.

SEE ALSO: Over 1,000 Germans face HSBC tax prosecutions

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Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.