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The CumEx-Files – How Europe's taxpayers have been swindled of €55B

357 points by hansen 8y ago

Reason077 8y ago
”Tax payers have lost up to €2 billion, that’s nearly €350,000 for every Danish man, woman and child.” You sure about that math, cumex-files?
- Wildgoose 8y ago
  Just arrived to make the exact same comment. Overstated a 1000 times, which suggests they are mistaking the new US-style billion of 1000 million for the old form of a billion (i.e. a million million).
  - Svip 8y ago
    I think the different 'billions' are called long and short scales.[0] [0] https://en.wikipedia.org/wiki/Long_and_short_scales https://en.wikipedia.org/wiki/Long_and_short_scales
- mseidl 8y ago
  Only off my a 1000x
- gilleain 8y ago
  What? Denmark is a small town of 5,700 people, isn't it? edit: Then I got curious about what size a 'town' is, which led me to https://en.wikipedia.org/wiki/Settlement_hierarchy https://en.wikipedia.org/wiki/Settlement_hierarchy which gave me the word 'Ecumenopolis' for a planet-wide city.
- fastball 8y ago
  Yeah, due to a very poor birthrate, the Danish population is currently at an all time low of ~5700 souls.
  - sparkling 8y ago
    And thats why they need muh immigration. jk
- GeneralMayhem 8y ago
  Possibly confusion by someone who's used to the long scale? In Danish, as in most non-English European languages, the cognate of "billion" means trillion (10^12).
  - buboard 8y ago
    > in most non-English European languages i dont think that's true
    - LoSboccacc 8y ago
      https://it.wikipedia.org/wiki/Bilione https://it.wikipedia.org/wiki/Bilione
    - Svip 8y ago
      > i dont think that's true Here is a handy list: https://en.wikipedia.org/wiki/Long_and_short_scales#Long_scale_users https://en.wikipedia.org/wiki/Long_and_short_scales#Long_sca...
      - buboard 8y ago
        weird. Greek is short, not "other"
        scatters 8y ago
        The Greek system parallels the short scale, but the terms themselves are derived from the myriad system; δισεκατομμύριο disekatommýrio, 10^9, literally reads twice-hundred-myriad.
    - rostigerpudel 8y ago
      Can confirm it's true for French and German: Million 10^6 Milliard(e) 10^9 Billion 10^12 Billiard(e) 10^15
    - GeneralMayhem 8y ago
      https://en.wikipedia.org/wiki/Long_and_short_scales#Long_scale_users https://en.wikipedia.org/wiki/Long_and_short_scales#Long_sca... The UK is the only place in Europe where "billion" means 10^9; in Eastern European languages, there simply isn't an equivalent word, and everywhere else it means 10^12.
- pfortuny 8y ago
  57.000.0000.000€ is not so much for a tax-evading scheme in the whole of Europe? Or is it...
  - sharpneli 8y ago
    It’s not tax evasion. It’s receiving tax refunds from taxes that never were paid. This time it actually is pure theft.
    - pfortuny 8y ago
      Yes, sorry. My bad. This is much worse... what a shame.
- flexie 8y ago
  Danish tax payers have lost around EUR 1.7B. That's around EUR 300 for every Dane. Still a lot, but a lot less than they claim. I have two takes on this: 1: The Danish tax authorities have been extremely careless in the administration of the rules. They didn't even check that the people owned the shares they claimed to own. Virtually all of it was approved by one employee with zero oversight. 2: Different international banks have either known what was happening, and willingly enabled it, or should have known. Money laundry rules oblige them to check when such giant sums flow in and out of such few accounts.
  - kartan 8y ago
    > They didn't even check that the people owned the shares they claimed to own Yes. But people hates bureaucracy. A common answer is'why do I need to present another document in the tax office?' At least now Danish citizens have an answer. 'to avoid losing 1.7B' bureaucracy is a remedy to a problem. It can be done right or wrong, but it's not bad by itself.
    - caf 8y ago
      They should have the companies themselves submit their share register as of the in-dividend date to the tax authority (which the company has to know anyway, since you can be damn sure that they're not paying dividends to people who didn't own the shares!). No register no refunds.
  - skummetmaelk 8y ago
    The Danish tax disaster has a long history beginning in the early 00's when it was decided to reform and digitalize the tax collection. Contractors were brought in to develop a nation-wide tax collection system that would reduce the cost of collecting tax. This system was to take many years to develop and a plan was made to gradually lay off employees in the tax collection agency as the system was made ready so that there would not be a massive excess of employees when the system was released. Of course the system was delayed.. by years... And there were fewer experienced employees available because the lay-off policy was to let people retire as normal, but just stop hiring. When the system finally was released, the tax collection service was in dire straits. Layoffs had continued, experience was lost. Employees were doing the work of 3 people without really knowing how and having noone to ask for advice. To top it off, it was politically decided to decentralise the tax collection service and split the offices into many small units across the country. Causing even more people to quit. This isn't the end though. The system was released all right, but it was quickly discovered that it was making illegal tax collections from citizens due to faulty property evaluation. Attempts were made to fix the system, but it was SCRAPPED AFTER TWO YEARS. Now we are left with a broken tax collection agency which cannot perform its duties and lacks manpower to verify tax claims from companies knowingly exploiting the situation.
- chvid 8y ago
  From observing this story in the danish media, there is a lot of fishiness about it. The numbers are just too big for it to make sense. And I would not be surprised to see some of it coming down to the lack of math skills (or what you call it?) amongst journalists. How can anyone arrive at a result like that and not look one more time at their calculation? Embarrassing really. With all the fuzz about Sanjay (the alleged perpetrator) why hasn’t the danish police issued an international arrest order for him? Regardless if he is sitting in Dubai.
  - Certhas 8y ago
    That embarrassing error of a factor 1000 aside, the story is all to real. It's been brewing and been reported on in Germany for a few years now. And what seems to be a common theme is that some of what has been going on is very hard to prosecute. The first wave of tricks seems to have been basically legal if I recall correctly. I haven't read the new slew of articles about the EU dimension on this yet though.
    - chvid 8y ago
      I have no doubt that there are elements of the story that are correct. But the shocking part of the story is the size of the amounts and the poor reporting by what should be an ace journalistic team coupled with common sense makes me doubt that the scale is correct. Plus the recent the story that Sanjay was put in jail due to a rubber check. Doesn’t sound like a guy who just got away with 1 B euros.
- raffael-vogler 8y ago
  The quote in the English text is: "In Denmark, journalists and the authorities are also investigating the cum-ex trades. Tax payers have lost up to €2 billion * , that’s nearly €350 for every Danish man, woman and child." That's correct - mathwise. *: https://translate.google.com/#en/de/billion https://translate.google.com/#en/de/billion
  - Reason077 8y ago
    Yes, looks like they have now corrected the article.
- pvaldes 8y ago
  https://en.wikipedia.org/wiki/Decimal_separator https://en.wikipedia.org/wiki/Decimal_separator The decimal separator in most european countries is the comma. $350,000 in Denmark equals to $350. If there is an error by a factor of x1000 I would assume that is a case of meaning lost in translation and not intentional. The use of a third decimal is uncommon and unfortunate in any case.
  - dhimes 8y ago
    They wouldn't use three trailing zeros. More likely is that they interpreted 1B as a million million, like the British do, instead of 1000 million.
    - pvaldes 8y ago
      Maybe a translator thought that it was an error and 'fixed it' adding the extra zero...
    - Reason077 8y ago
      Billion means “1000 million” in British English, not “million million” (which is Trillion).
      - dhimes 8y ago
        Did they change it?
        Reason077 8y ago
        Yes, many decades ago. The modern “short scale” billion Is found in UK technical documents and papers beginning in the 1950s, and used in official UK statistics since 1974. https://en.m.wikipedia.org/wiki/Billion https://en.m.wikipedia.org/wiki/Billion
- 2color 8y ago
  Something is rotten in the state of Denmark...
deleted 8y ago
[deleted]
buboard 8y ago
It would be nice if they could cut to the chase instead of playing pretend Dostoyevski.
- amarant 8y ago
  thanks for this comment, saved me alot of time, and gave me a nice chuckle. this form of article is becoming way to common lately
  - woodpanel 8y ago
    It is extra weird that the ones they are talking about in this Dostoyevskian intro, are the authors of the piece themselve.
    - dmix 8y ago
      People abuse Gonzo style journalism all the time these days. What they don't realize is that Hunter S Thompson was a) an inherently interesting character and b) his character was half-bullshit most of the time to make the story more interesting. Journalists keep injecting themselves into their stories without being either interesting or contribute in any way (other than to show off their narrative and descriptive writing skills). I hope it's just a short term trend or due to journalism budget cuts.
- PunchTornado 8y ago
  I don't mind the style. Works for those who have some downtime at work. But you should definitely include a summary for the rest of us.
- 0xfaded 8y ago
  To be fair, the journalists put a lot of effort and money into this story. I think they should be allowed to tell the story as they see fit. I'm sure the key points will be hashed and rehashed until many of the type of article you want are all over the internet.
  - 8y ago
etaty 8y ago
tl;dr; People asked for task refund on tax they didn't pay.
cbg0 8y ago
There's a previous discussion for a NY Times article here: https://news.ycombinator.com/item?id=18149831 https://news.ycombinator.com/item?id=18149831
- mrfredward 8y ago
  That NYT article was a lot better for understanding what was happening. I recommend it over the website here, even though it looks at Denmark instead of the whole EU.
sparkling 8y ago
The missing transparancy disclaimer: "The Cumex files" is headed by "Correctiv", a german based "journalist network" which receives large parts of its funding by german goverment organizations and/or organizations which have close gov connections. But: the german goverment itself was aware of this scheme since at least 2002. Also: this is a drop in the ocean compared to EU-internal tax loop holes and tax havens such as Luxembourg.
- morsch 8y ago
  A disclaimer implies there is something to disclaim, such as a financial conflict of interest - what reason for a disclaimer are you imagining? Besides, they literally have a link to a page with detailed financial information, including every organization that gave them more than 1000 EUR to them. Most of their funding in 2017 came from private parties not affiliated with any government. I can't find any numbers for 2018, which is a shame. https://correctiv.org/en/about-us/ https://correctiv.org/en/about-us/
  - buboard 8y ago
    The article may for example be intentionally be silent on inefficiency/misbehavior of tax authorities.
    - matt4077 8y ago
      Your conspiracy seems rather incompetent if they chose to use their money to silence their critics on some aspects, considering they financed that very investigation in the first place.
- Xylakant 8y ago
  The list of donors can be found here, broken down by year: https://correctiv.org/ueber-uns/ https://correctiv.org/ueber-uns/ This years biggest sponsor is by far the Omidyar Network Foundation (eBay Founder) with 640.051,24 Euro, followed by the Brost Foundation and Schöpflin Foundation with about 200.000 EUR each. The Bundeszentrale für politische Bildung gives 20.390 Euro. Last years breakdown looks slightly different, but private foundations cover the lions share of the costs.
GrumpyNl 8y ago
Great journalism by FollowTheMoney.( with 12 other countries) Journalism the way it should be. Independent journalism payed by sponsors. https://www.ftm.nl/ https://www.ftm.nl/ , if you are dutch, you should sponsor them to.
- davedx 8y ago
  Yikes, that site needs an epilepsy warning. :(
Abishek_Muthian 8y ago
Compliance are for small-medium Business & for common people; once a Business or a person grows too big to fail, paying the fines or bribing the legislators is the common route in most parts of the world. I've anguished over this for years and have learned to accept it, depending upon where you live; this comment might sound entirely absurd.
- maaaats 8y ago
  If GDPR killed a startup it probably wasn't something worth keeping. Being compliant is sooo easy for small companies, it's mostly just about not being a dick about privacy. And I have no idea why you thought bringing this up was relevant.
- eeZah7Ux 8y ago
  Statistics show a strong correlation between personal wealth and conviction rate for those accused of serious crimes.
mmanfrin 8y ago
I'm sorry, but what an unfortunate name.
- deleted 8y ago
  [deleted]
- toyg 8y ago
  Knowing bankers’ humour, it’s probably anything but.
Jnr 8y ago
TL;DR In the old days when space on paper was a limitation, journalism was about squeezing essence of the story in as few words as possible. Instead they have come up with some sort of graphical novel.
Klover 8y ago
The website could not be worse for mobile. There’s a bar at the top, at the bottom, the address bar won’t collapse, and to top it all off you can’t use reader mode to fix it.
m12k 8y ago
This reminds me of the way most application developers aren't security experts, and it's taken decades with a lot of very public hacks for awareness about the risks to be spread and for a set of security practices and middleware to evolve (hashed & salted passwords, CSRF mitigation, input sanitation, etc.), to make it feasible for normal developers to create reasonably secure applications. It seems something similar needs to happen in tax administration (and tax law) to make tax systems that are not exploitable. Maybe a new class of white-hats to "pen-test" the tax systems using loopholes and shell companies instead of 0-days and scanners?
- vijayr02 8y ago
  The issue is that the tax system is a political/economic construct - so loopholes will take a very long time to be fixed. In the meantime, the white hat tax researchers have shown everyone else how to game the system.
- buboard 8y ago
  if you are going to be opening law to competition-based evolution, you are opening the can of worms of "alternative government systems" , which is not acceptable by the elite groups that run the world.
PythonicAlpha 8y ago
The German government did know about this stuff I think from 2002 or 2001 on, but still did not stop it until around 2012 in Germany and did not warn other countries, so it went on in those. I just can not understand, how the government of my country could work this way. It really borders to actively supporting this scam. In my opinion, not only the people that have done this (including many banks!), but also responsible persons in the government or ministries should take responsibilities. But in Germany, if you are big enough or in government, you can do nearly everything without effects. Banks already have looted the people of many countries in 2008/2009.
- krylon 8y ago
  > But in Germany, if you are big enough or in government, you can do nearly everything without effects. While I sadly agree, I would like to point out that this is true of many countries.
  - growlist 8y ago
    Whatabout!
    - dang 8y ago
      Please don't do this here.
  - PythonicAlpha 8y ago
    I wanted to speak only for my own country, while I sadly think, I must agree.
raffael-vogler 8y ago
correctiv.org is producing phantastic investigative journalism on a regular basis. one of their most important revelations recently was about a pharmacist who was selling heavily diluted cytostatic agents for chemo therapy. several people died because of this [1]. really awesome about correctiv is that they not just release their findings - they really make sure that something is going to be done about it. for example the government didn't do much about above mentioned case - they didn't even bother to inform the patients. so correctiv rented a shop in that town (Bottrop) where people could inform themselves about the matter. if you want to support them: https://correctiv.org/ueber-uns/#unterstuetzen-sie-unabhaengigen-journalismus https://correctiv.org/ueber-uns/#unterstuetzen-sie-unabhaeng.... the one thing I find most concerning about these kind of revelations is that it seems that journalism is more and more responsible for work police should be doing. [1]: https://correctiv.org/ruhr/alte-apotheke/2018/08/10/trotz-angekuendigter-kontrollen-maengel-und-unterdosierung-bei-krebsmedikamenten-in-nrw https://correctiv.org/ruhr/alte-apotheke/2018/08/10/trotz-an...
- inetknght 8y ago
  > it seems that journalism is more and more responsible for work police should be doing I think this echoes a lot of sentiment, if perhaps without concrete evidence, across the world. How can we solve this?
  - ianai 8y ago
    For people in “democratic” countries, get involved in civic duties. Register to vote, stay informed, volunteer to canvass and spread the word for campaigns. I donate monthly to causes I care about supporting. Corruption reform has taken place through these routes. Edit-pedantry
    - cbnotfromthere 8y ago
      "For people in democratic republic countries" So obviously people from the UK, Norway, Netherlands, and Spain should not get involved /facepalm
chodeboy 8y ago
tl;dr This scheme involves a complex juggle of shares between investors and thereby generating multiple tax reductions on effectively the same shares. This juggle included several banks, investors and lawyer to function which operated in a ring across Europe.
loxs 8y ago
European taxpayers have been swindled of much more at the moment they paid their taxes. Who will later steal it once more from the thieves isn't really that interesting.
netsharc 8y ago
So, they wrote "UBS drive"... is that a typo of USB, or did they get a leak from that bank?
andrewla 8y ago
This article is very hard to follow to figure out what has actually happened or what CumEx is. In the beginning of the article is a rough description of the trade in question: > Cum-ex – this is the name German media have given to this scam. Internationally the different variants of these trades are known as dividend arbitrage. > Cum-ex and its variant cum-cum were highly complex share deals with no economic purpose other than to receive tax ‘reimbursements’ from the state – but for tax that had never in fact been paid. This is how it went. The participants would lend each other shares of major corporations, creating the appearance for the tax authorities that there were two owners of the shares when in fact there was only one. The bank which settled the trades would then issue a ‘confirmation’ to the investor that tax on dividend payment had been paid to the tax office – when in fact it had not. With this confirmation in hand, the investors were then ‘reimbursed’ by the state. It’s a bit like parents claiming child benefit for two – or more – children when there is only one child in the family. Late in the article we get a description of the origin of the trade: > The money machine > According to Frey, an equity trader at a US investment bank came across the trade accidentally. He had bought shares that were delivered four days later. This interval covered the dividend payment day of the company whose shares he had purchased. This profit is taxed in the domicile of the company (say, Germany). German shareholders can ask for this tax to be reimbursed because they have already paid corporation tax. > The trader suddenly realised he had this tax payable in his book without actually owning the shares. The amount was £50 million. It was a very large trade. > The trader wanted to get rid of these funds that were not his. He approached the seller of the shares who had also been reimbursed his tax. The bank’s legal department sought professional tax advice to find out how to return the money to the tax office. The answer came back: “You can keep it.” > There is no law that prohibits a multiple tax payout, they said. And if something is not explicitly prohibited, it is legal, the tax advisors argued. The trader kept the money. And because the tax reimbursement happened automatically, the scheme could be repeated time and again. > All you needed was enough funds to trade the shares for a few days around dividend payment date. Or you could even just borrow the shares. Following "dividend arbitrage", there are a couple of other articles that talk about it, Bloomberg [1] and ProPublica [2], though it's hard to tell if they're talking about the same thing or an older version of the scheme. In Denmark, where there is the most evidence of reimbursement for unpaid taxes, it looks like the investigations date to 2015 [3]. [1] https://www.bloomberg.com/news/articles/2018-05-18/denmark-tax-collection-agency-sues-in-new-york-over-refund-scam https://www.bloomberg.com/news/articles/2018-05-18/denmark-t... [2] https://www.propublica.org/article/denmark-is-big-victim-of-wall-street-tax-avoidance-deals https://www.propublica.org/article/denmark-is-big-victim-of-... [3] https://www.thelocal.dk/20150925/danish-tax-authority-cleans-up-after-scandals https://www.thelocal.dk/20150925/danish-tax-authority-cleans...
sschueller 8y ago
Is something like this also going on in the US? US tax laws are probably just as complicated as European ones.
dnjdirjrmrf 8y ago
Taxation is already swindling (ie: theft) Did yoi really think the thieves will gice you something back in return? When we people learn
based2 8y ago
https://www.nytimes.com/2018/10/05/business/denmark-skat-tax-scandal.html https://www.nytimes.com/2018/10/05/business/denmark-skat-tax... https://news.ycombinator.com/item?id=18149831 https://news.ycombinator.com/item?id=18149831
stefek99 8y ago
TLDR (saved for later reading) In my understanding of reality, it's "business as usual".

357 points by hansen 8y ago

”Tax payers have lost up to €2 billion, that’s nearly €350,000 for every Danish man, woman and child.” You sure about that math, cumex-files?

Wildgoose 8y ago
Just arrived to make the exact same comment. Overstated a 1000 times, which suggests they are mistaking the new US-style billion of 1000 million for the old form of a billion (i.e. a million million).
- Svip 8y ago
  I think the different 'billions' are called long and short scales.[0] [0] https://en.wikipedia.org/wiki/Long_and_short_scales https://en.wikipedia.org/wiki/Long_and_short_scales
mseidl 8y ago
Only off my a 1000x
gilleain 8y ago
What? Denmark is a small town of 5,700 people, isn't it? edit: Then I got curious about what size a 'town' is, which led me to https://en.wikipedia.org/wiki/Settlement_hierarchy https://en.wikipedia.org/wiki/Settlement_hierarchy which gave me the word 'Ecumenopolis' for a planet-wide city.
fastball 8y ago
Yeah, due to a very poor birthrate, the Danish population is currently at an all time low of ~5700 souls.
- sparkling 8y ago
  And thats why they need muh immigration. jk
GeneralMayhem 8y ago
Possibly confusion by someone who's used to the long scale? In Danish, as in most non-English European languages, the cognate of "billion" means trillion (10^12).
- buboard 8y ago
  > in most non-English European languages i dont think that's true
  - LoSboccacc 8y ago
    https://it.wikipedia.org/wiki/Bilione https://it.wikipedia.org/wiki/Bilione
  - Svip 8y ago
    > i dont think that's true Here is a handy list: https://en.wikipedia.org/wiki/Long_and_short_scales#Long_scale_users https://en.wikipedia.org/wiki/Long_and_short_scales#Long_sca...
    - buboard 8y ago
      weird. Greek is short, not "other"
      - scatters 8y ago
        The Greek system parallels the short scale, but the terms themselves are derived from the myriad system; δισεκατομμύριο disekatommýrio, 10^9, literally reads twice-hundred-myriad.
  - rostigerpudel 8y ago
    Can confirm it's true for French and German: Million 10^6 Milliard(e) 10^9 Billion 10^12 Billiard(e) 10^15
  - GeneralMayhem 8y ago
    https://en.wikipedia.org/wiki/Long_and_short_scales#Long_scale_users https://en.wikipedia.org/wiki/Long_and_short_scales#Long_sca... The UK is the only place in Europe where "billion" means 10^9; in Eastern European languages, there simply isn't an equivalent word, and everywhere else it means 10^12.
pfortuny 8y ago
57.000.0000.000€ is not so much for a tax-evading scheme in the whole of Europe? Or is it...
- sharpneli 8y ago
  It’s not tax evasion. It’s receiving tax refunds from taxes that never were paid. This time it actually is pure theft.
  - pfortuny 8y ago
    Yes, sorry. My bad. This is much worse... what a shame.
flexie 8y ago
Danish tax payers have lost around EUR 1.7B. That's around EUR 300 for every Dane. Still a lot, but a lot less than they claim. I have two takes on this: 1: The Danish tax authorities have been extremely careless in the administration of the rules. They didn't even check that the people owned the shares they claimed to own. Virtually all of it was approved by one employee with zero oversight. 2: Different international banks have either known what was happening, and willingly enabled it, or should have known. Money laundry rules oblige them to check when such giant sums flow in and out of such few accounts.
- kartan 8y ago
  > They didn't even check that the people owned the shares they claimed to own Yes. But people hates bureaucracy. A common answer is'why do I need to present another document in the tax office?' At least now Danish citizens have an answer. 'to avoid losing 1.7B' bureaucracy is a remedy to a problem. It can be done right or wrong, but it's not bad by itself.
  - caf 8y ago
    They should have the companies themselves submit their share register as of the in-dividend date to the tax authority (which the company has to know anyway, since you can be damn sure that they're not paying dividends to people who didn't own the shares!). No register no refunds.
- skummetmaelk 8y ago
  The Danish tax disaster has a long history beginning in the early 00's when it was decided to reform and digitalize the tax collection. Contractors were brought in to develop a nation-wide tax collection system that would reduce the cost of collecting tax. This system was to take many years to develop and a plan was made to gradually lay off employees in the tax collection agency as the system was made ready so that there would not be a massive excess of employees when the system was released. Of course the system was delayed.. by years... And there were fewer experienced employees available because the lay-off policy was to let people retire as normal, but just stop hiring. When the system finally was released, the tax collection service was in dire straits. Layoffs had continued, experience was lost. Employees were doing the work of 3 people without really knowing how and having noone to ask for advice. To top it off, it was politically decided to decentralise the tax collection service and split the offices into many small units across the country. Causing even more people to quit. This isn't the end though. The system was released all right, but it was quickly discovered that it was making illegal tax collections from citizens due to faulty property evaluation. Attempts were made to fix the system, but it was SCRAPPED AFTER TWO YEARS. Now we are left with a broken tax collection agency which cannot perform its duties and lacks manpower to verify tax claims from companies knowingly exploiting the situation.
chvid 8y ago
From observing this story in the danish media, there is a lot of fishiness about it. The numbers are just too big for it to make sense. And I would not be surprised to see some of it coming down to the lack of math skills (or what you call it?) amongst journalists. How can anyone arrive at a result like that and not look one more time at their calculation? Embarrassing really. With all the fuzz about Sanjay (the alleged perpetrator) why hasn’t the danish police issued an international arrest order for him? Regardless if he is sitting in Dubai.
- Certhas 8y ago
  That embarrassing error of a factor 1000 aside, the story is all to real. It's been brewing and been reported on in Germany for a few years now. And what seems to be a common theme is that some of what has been going on is very hard to prosecute. The first wave of tricks seems to have been basically legal if I recall correctly. I haven't read the new slew of articles about the EU dimension on this yet though.
  - chvid 8y ago
    I have no doubt that there are elements of the story that are correct. But the shocking part of the story is the size of the amounts and the poor reporting by what should be an ace journalistic team coupled with common sense makes me doubt that the scale is correct. Plus the recent the story that Sanjay was put in jail due to a rubber check. Doesn’t sound like a guy who just got away with 1 B euros.
raffael-vogler 8y ago
The quote in the English text is: "In Denmark, journalists and the authorities are also investigating the cum-ex trades. Tax payers have lost up to €2 billion * , that’s nearly €350 for every Danish man, woman and child." That's correct - mathwise. *: https://translate.google.com/#en/de/billion https://translate.google.com/#en/de/billion
- Reason077 8y ago
  Yes, looks like they have now corrected the article.
pvaldes 8y ago
https://en.wikipedia.org/wiki/Decimal_separator https://en.wikipedia.org/wiki/Decimal_separator The decimal separator in most european countries is the comma. $350,000 in Denmark equals to $350. If there is an error by a factor of x1000 I would assume that is a case of meaning lost in translation and not intentional. The use of a third decimal is uncommon and unfortunate in any case.
- dhimes 8y ago
  They wouldn't use three trailing zeros. More likely is that they interpreted 1B as a million million, like the British do, instead of 1000 million.
  - pvaldes 8y ago
    Maybe a translator thought that it was an error and 'fixed it' adding the extra zero...
  - Reason077 8y ago
    Billion means “1000 million” in British English, not “million million” (which is Trillion).
    - dhimes 8y ago
      Did they change it?
      - Reason077 8y ago
        Yes, many decades ago. The modern “short scale” billion Is found in UK technical documents and papers beginning in the 1950s, and used in official UK statistics since 1974. https://en.m.wikipedia.org/wiki/Billion https://en.m.wikipedia.org/wiki/Billion
2color 8y ago
Something is rotten in the state of Denmark...

deleted 8y ago

[deleted]

buboard 8y ago

It would be nice if they could cut to the chase instead of playing pretend Dostoyevski.

amarant 8y ago
thanks for this comment, saved me alot of time, and gave me a nice chuckle. this form of article is becoming way to common lately
- woodpanel 8y ago
  It is extra weird that the ones they are talking about in this Dostoyevskian intro, are the authors of the piece themselve.
  - dmix 8y ago
    People abuse Gonzo style journalism all the time these days. What they don't realize is that Hunter S Thompson was a) an inherently interesting character and b) his character was half-bullshit most of the time to make the story more interesting. Journalists keep injecting themselves into their stories without being either interesting or contribute in any way (other than to show off their narrative and descriptive writing skills). I hope it's just a short term trend or due to journalism budget cuts.
PunchTornado 8y ago
I don't mind the style. Works for those who have some downtime at work. But you should definitely include a summary for the rest of us.
0xfaded 8y ago
To be fair, the journalists put a lot of effort and money into this story. I think they should be allowed to tell the story as they see fit. I'm sure the key points will be hashed and rehashed until many of the type of article you want are all over the internet.
- 8y ago

etaty 8y ago

tl;dr; People asked for task refund on tax they didn't pay.

cbg0 8y ago

There's a previous discussion for a NY Times article here: https://news.ycombinator.com/item?id=18149831 https://news.ycombinator.com/item?id=18149831

mrfredward 8y ago
That NYT article was a lot better for understanding what was happening. I recommend it over the website here, even though it looks at Denmark instead of the whole EU.

sparkling 8y ago

The missing transparancy disclaimer: "The Cumex files" is headed by "Correctiv", a german based "journalist network" which receives large parts of its funding by german goverment organizations and/or organizations which have close gov connections. But: the german goverment itself was aware of this scheme since at least 2002. Also: this is a drop in the ocean compared to EU-internal tax loop holes and tax havens such as Luxembourg.

morsch 8y ago
A disclaimer implies there is something to disclaim, such as a financial conflict of interest - what reason for a disclaimer are you imagining? Besides, they literally have a link to a page with detailed financial information, including every organization that gave them more than 1000 EUR to them. Most of their funding in 2017 came from private parties not affiliated with any government. I can't find any numbers for 2018, which is a shame. https://correctiv.org/en/about-us/ https://correctiv.org/en/about-us/
- buboard 8y ago
  The article may for example be intentionally be silent on inefficiency/misbehavior of tax authorities.
  - matt4077 8y ago
    Your conspiracy seems rather incompetent if they chose to use their money to silence their critics on some aspects, considering they financed that very investigation in the first place.
Xylakant 8y ago
The list of donors can be found here, broken down by year: https://correctiv.org/ueber-uns/ https://correctiv.org/ueber-uns/ This years biggest sponsor is by far the Omidyar Network Foundation (eBay Founder) with 640.051,24 Euro, followed by the Brost Foundation and Schöpflin Foundation with about 200.000 EUR each. The Bundeszentrale für politische Bildung gives 20.390 Euro. Last years breakdown looks slightly different, but private foundations cover the lions share of the costs.

GrumpyNl 8y ago

Great journalism by FollowTheMoney.( with 12 other countries) Journalism the way it should be. Independent journalism payed by sponsors. https://www.ftm.nl/ https://www.ftm.nl/ , if you are dutch, you should sponsor them to.

davedx 8y ago
Yikes, that site needs an epilepsy warning. :(

Abishek_Muthian 8y ago

Compliance are for small-medium Business & for common people; once a Business or a person grows too big to fail, paying the fines or bribing the legislators is the common route in most parts of the world. I've anguished over this for years and have learned to accept it, depending upon where you live; this comment might sound entirely absurd.

maaaats 8y ago
If GDPR killed a startup it probably wasn't something worth keeping. Being compliant is sooo easy for small companies, it's mostly just about not being a dick about privacy. And I have no idea why you thought bringing this up was relevant.
eeZah7Ux 8y ago
Statistics show a strong correlation between personal wealth and conviction rate for those accused of serious crimes.

mmanfrin 8y ago

I'm sorry, but what an unfortunate name.

deleted 8y ago
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toyg 8y ago
Knowing bankers’ humour, it’s probably anything but.

Jnr 8y ago

TL;DR In the old days when space on paper was a limitation, journalism was about squeezing essence of the story in as few words as possible. Instead they have come up with some sort of graphical novel.

Klover 8y ago

The website could not be worse for mobile. There’s a bar at the top, at the bottom, the address bar won’t collapse, and to top it all off you can’t use reader mode to fix it.

m12k 8y ago

This reminds me of the way most application developers aren't security experts, and it's taken decades with a lot of very public hacks for awareness about the risks to be spread and for a set of security practices and middleware to evolve (hashed & salted passwords, CSRF mitigation, input sanitation, etc.), to make it feasible for normal developers to create reasonably secure applications. It seems something similar needs to happen in tax administration (and tax law) to make tax systems that are not exploitable. Maybe a new class of white-hats to "pen-test" the tax systems using loopholes and shell companies instead of 0-days and scanners?

vijayr02 8y ago
The issue is that the tax system is a political/economic construct - so loopholes will take a very long time to be fixed. In the meantime, the white hat tax researchers have shown everyone else how to game the system.
buboard 8y ago
if you are going to be opening law to competition-based evolution, you are opening the can of worms of "alternative government systems" , which is not acceptable by the elite groups that run the world.

PythonicAlpha 8y ago

The German government did know about this stuff I think from 2002 or 2001 on, but still did not stop it until around 2012 in Germany and did not warn other countries, so it went on in those. I just can not understand, how the government of my country could work this way. It really borders to actively supporting this scam. In my opinion, not only the people that have done this (including many banks!), but also responsible persons in the government or ministries should take responsibilities. But in Germany, if you are big enough or in government, you can do nearly everything without effects. Banks already have looted the people of many countries in 2008/2009.

krylon 8y ago
> But in Germany, if you are big enough or in government, you can do nearly everything without effects. While I sadly agree, I would like to point out that this is true of many countries.
- growlist 8y ago
  Whatabout!
  - dang 8y ago
    Please don't do this here.
- PythonicAlpha 8y ago
  I wanted to speak only for my own country, while I sadly think, I must agree.

raffael-vogler 8y ago

correctiv.org is producing phantastic investigative journalism on a regular basis. one of their most important revelations recently was about a pharmacist who was selling heavily diluted cytostatic agents for chemo therapy. several people died because of this [1]. really awesome about correctiv is that they not just release their findings - they really make sure that something is going to be done about it. for example the government didn't do much about above mentioned case - they didn't even bother to inform the patients. so correctiv rented a shop in that town (Bottrop) where people could inform themselves about the matter. if you want to support them: https://correctiv.org/ueber-uns/#unterstuetzen-sie-unabhaengigen-journalismus https://correctiv.org/ueber-uns/#unterstuetzen-sie-unabhaeng.... the one thing I find most concerning about these kind of revelations is that it seems that journalism is more and more responsible for work police should be doing. [1]: https://correctiv.org/ruhr/alte-apotheke/2018/08/10/trotz-angekuendigter-kontrollen-maengel-und-unterdosierung-bei-krebsmedikamenten-in-nrw https://correctiv.org/ruhr/alte-apotheke/2018/08/10/trotz-an...

inetknght 8y ago
> it seems that journalism is more and more responsible for work police should be doing I think this echoes a lot of sentiment, if perhaps without concrete evidence, across the world. How can we solve this?
- ianai 8y ago
  For people in “democratic” countries, get involved in civic duties. Register to vote, stay informed, volunteer to canvass and spread the word for campaigns. I donate monthly to causes I care about supporting. Corruption reform has taken place through these routes. Edit-pedantry
  - cbnotfromthere 8y ago
    "For people in democratic republic countries" So obviously people from the UK, Norway, Netherlands, and Spain should not get involved /facepalm

chodeboy 8y ago

tl;dr This scheme involves a complex juggle of shares between investors and thereby generating multiple tax reductions on effectively the same shares. This juggle included several banks, investors and lawyer to function which operated in a ring across Europe.

loxs 8y ago

European taxpayers have been swindled of much more at the moment they paid their taxes. Who will later steal it once more from the thieves isn't really that interesting.

netsharc 8y ago

So, they wrote "UBS drive"... is that a typo of USB, or did they get a leak from that bank?

andrewla 8y ago

This article is very hard to follow to figure out what has actually happened or what CumEx is. In the beginning of the article is a rough description of the trade in question: > Cum-ex – this is the name German media have given to this scam. Internationally the different variants of these trades are known as dividend arbitrage. > Cum-ex and its variant cum-cum were highly complex share deals with no economic purpose other than to receive tax ‘reimbursements’ from the state – but for tax that had never in fact been paid. This is how it went. The participants would lend each other shares of major corporations, creating the appearance for the tax authorities that there were two owners of the shares when in fact there was only one. The bank which settled the trades would then issue a ‘confirmation’ to the investor that tax on dividend payment had been paid to the tax office – when in fact it had not. With this confirmation in hand, the investors were then ‘reimbursed’ by the state. It’s a bit like parents claiming child benefit for two – or more – children when there is only one child in the family. Late in the article we get a description of the origin of the trade: > The money machine > According to Frey, an equity trader at a US investment bank came across the trade accidentally. He had bought shares that were delivered four days later. This interval covered the dividend payment day of the company whose shares he had purchased. This profit is taxed in the domicile of the company (say, Germany). German shareholders can ask for this tax to be reimbursed because they have already paid corporation tax. > The trader suddenly realised he had this tax payable in his book without actually owning the shares. The amount was £50 million. It was a very large trade. > The trader wanted to get rid of these funds that were not his. He approached the seller of the shares who had also been reimbursed his tax. The bank’s legal department sought professional tax advice to find out how to return the money to the tax office. The answer came back: “You can keep it.” > There is no law that prohibits a multiple tax payout, they said. And if something is not explicitly prohibited, it is legal, the tax advisors argued. The trader kept the money. And because the tax reimbursement happened automatically, the scheme could be repeated time and again. > All you needed was enough funds to trade the shares for a few days around dividend payment date. Or you could even just borrow the shares. Following "dividend arbitrage", there are a couple of other articles that talk about it, Bloomberg [1] and ProPublica [2], though it's hard to tell if they're talking about the same thing or an older version of the scheme. In Denmark, where there is the most evidence of reimbursement for unpaid taxes, it looks like the investigations date to 2015 [3]. [1] https://www.bloomberg.com/news/articles/2018-05-18/denmark-tax-collection-agency-sues-in-new-york-over-refund-scam https://www.bloomberg.com/news/articles/2018-05-18/denmark-t... [2] https://www.propublica.org/article/denmark-is-big-victim-of-wall-street-tax-avoidance-deals https://www.propublica.org/article/denmark-is-big-victim-of-... [3] https://www.thelocal.dk/20150925/danish-tax-authority-cleans-up-after-scandals https://www.thelocal.dk/20150925/danish-tax-authority-cleans...

sschueller 8y ago

Is something like this also going on in the US? US tax laws are probably just as complicated as European ones.

dnjdirjrmrf 8y ago

Taxation is already swindling (ie: theft) Did yoi really think the thieves will gice you something back in return? When we people learn

based2 8y ago

https://www.nytimes.com/2018/10/05/business/denmark-skat-tax-scandal.html https://www.nytimes.com/2018/10/05/business/denmark-skat-tax... https://news.ycombinator.com/item?id=18149831 https://news.ycombinator.com/item?id=18149831

stefek99 8y ago

TLDR (saved for later reading) In my understanding of reality, it's "business as usual".