It May Be the Biggest Tax Heist Ever. And Europe Wants Justice | Hacker News Reader

It May Be the Biggest Tax Heist Ever. And Europe Wants Justice

nytimes.com

25 pointscs70211 comments

They passed ineffective laws against it. To me that strongly suggests it actually was legal even thought the state didn't want it to be.

This sort of reasoning is why we have judges, though. If the law isn't capable of preventing something that requires a rube-goldberg machine of trades and positions, then a judge using common sense ought to be able.

It's pretty clear that one tax refund should be claimed one time, and suggesting the contrary (that claiming it twice is OK, e.g. that cum-ex is fine) is mental gymnastics to justify fraud/theft.

If someone is ok with stealing from the government (aka, your fellow taxpayers) then they should be willing to accept the consequences of being caught.

Totally agree. It's useful to bear in mind European legal systems are different, and more spirit of the law. It's hard to imagine these highly knowledgable people didn't know what they were doing, and the trial will try to show this.

German culture also doesn't encourage or reward rule breaking. Famously, you don't jaywalk. (There are downsides to this, see Tesla vs German car industry.) This doesn't bode well for anybody involved with Cum-Ex deals.

A principle like “one tax refund should be claimed one time” is not clear at all. There are hundreds of different rules for getting refunds on your taxes and many of them can be used multiple times.

Judges are supposed to follow the law. What you are describing is judicial activism, which is not the function of the judiciary. The laws should be written correctly, if they are not they need to be fixed -- not enforced differently by judicial fiat.

A judge is capable of saying the law is improper, you're not guilty, but a judge isn't capable of criminalizing conduct which the law doesn't make criminal, no matter how obvious it is that they did something wrong.

For example, a drug dealer who walked because the state law misspelled the drug. A one character error but it was a perfectly valid chemical name, just not the one they intended to make illegal.

What was the actual mechanism they exploited that made them think or pretend to think that this was legal? There is some explanation in the Wikipedia article but it doesn't describe how the refund was untied from, say, actually receiving a dividend, or the payment of some tax that would get refunded.

https://en.m.wikipedia.org/wiki/CumEx-Files

As I understand it, it "wasn't considered illegal" and for some shady minds that means it is legal, even if highly dubious or morally wrong. The mechanism that made it possible was outlawed at some point, I think 2011, but the fraud continued.

There is a simplified explanation of the mechanism here [1], from which the following is taken:

> Simplified, cum-ex trading works something like this:

> Party One [..] "lends" its stock to Party Two, a bank. Under the agreement, the title and ownership of the stock is temporarily transferred to the borrower in return for a fee. [..]

> Party Two then sells the shares with-dividend to Party Three fractionally before the Record Date [i.e. dividend soon-to-be-payed]. However, the shares are delivered without-dividend just after.

> Like a magic trick, the shares "disappear" fractionally before the Record Date and "reappear" with a new owner just after. The aim is to obscure exactly who – Party One, Two or Three – owns the stock on the Record Date. As a result, two parties can simultaneously claim ownership of the one stock.

> Up until 2011, a loophole in the German tax code allowed both Party One and Party Three [..] to claim a tax reimbursement. All colluding parties would then split the gains.

[1] https://theconversation.com/the-robbery-of-the-century-the-c...

> As a result, two parties can simultaneously claim ownership of the one stock.

interesting, a very special case of double-spending attack, but on a security? was this kind of thing much more commonplace before electronic trading systems came about

Totally agree that this could be morally wrong or "dubious", but the definition of "not illegal" is legal.

Paywall bypass:

http://archive.is/8J8tC

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