German former tax inspector jailed for 8 years over cum-ex fraud

A former senior German tax inspector was convicted and sentenced to eight years in jail on Tuesday over his role in a long-running dividend tax fraud following a landmark trial in Bonn.

Hanno Berger was accused by prosecutors of being one of the masterminds behind a fraud that led the German government to refunding billions of euros of dividend taxes that had never been paid.

Berger, who was extradited from Switzerland earlier this year after spending almost a decade on the run, was also ordered to repay €13.7mn to the German government, a spokesperson for the Bonn court told the Financial Times.

Germany is among the European countries hardest hit by the so-called “cum-ex” scandal. These “cum-ex” transactions cost German taxpayers some €10bn, according to an estimate by Finanzwende, a consumer protection lobby group.

Having reached a senior position in the German tax authority, Berger later became a tax lawyer. Prosecutors accused him of having advertised the fraudulent scheme to clients and being directly involved in transactions that cost German taxpayers €279mn

The 72-year-old has been in police custody since his extradition from Switzerland, where he has a holiday home and where he fled to in 2012 on the day his office in Frankfurt was raided.

While several bankers received jail terms in previous trials relating to the cum-ex scandal, Berger’s sentence is the longest. Investigations by public prosecutors in Cologne and Frankfurt into the scandal are focusing on 1,500 suspects and 100 banks on four continents, including more than 70 Deutsche Bank employees.

Next year, two former partners of magic circle law firm Freshfields, including Ulf Johannemann, once the firm’s head of global tax, will face trial in a Frankfurt court over their alleged role in the fraud. Prosecutors accuse them of abetting the fraud by issuing flawed opinions over the legality of the practice.

Prosecutors had sought a sentence of nine years for Berger, who faces a second trial over different cum-ex transactions at a court in Wiesbaden.

Gerhard Schick, a former Green member of parliament who now heads Finanzwende, said the verdict of the Bonn court was “a reason for great joy” as it showed that justice was stronger than “criminal money”.

A lawyer for Berger did not immediately respond to a request for comment.

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