Banking industry criticized the taxation of Cum-Cum-shops – THE WORLD

(Bloomberg) – A planned German Finance Minister Wolfgang Schäuble stricter taxation of so-called Cum-Cum-business encounters at national and international banks Criticism.

The proposed rules for the taxation of Cum-Cum-shops “effort far beyond the mark” and lead to the fact that even “normal” trade in the future more stringent be taxed, warn the Association of German banks and the German banking industry in a statement. Restrictions were “urgently needed” to ensure that only the cases of abuse are recognized and harmful effects on the capital market to avoid calling the organizations in an Opinion on the consultation of the Finance Committee on Monday in parliament.

In Cum-Cum-shops it goes around the trading of shares by the dividend record date, to prevent with the aim of a tax on the dividend. Shortly before the dividend shares are transferred from one investor to another – either by a sale and subsequent repurchase or through a toll securities. This leads to an undesired by the tax authorities tax effect: The repurchase of the shares covered losses that are transformed in a tax benefit, the share transferor and transferee

In February, the cabinet adopted a bill to curb Cum-Cum-transactions by means of a holding period. The federal government is planning a minimum holding period of 45 days for refund of withholding tax on dividends for shares. The amendment should apply retroactively from January this year.

The Association of Foreign Banks in Germany expressed “great concern” with a view to the practical implementation and effectiveness of the system in the fight against tax abuse. “It will be virtually impossible in a bulk process in practice, demonstrate compliance with the 45-day period”, warns the Association of foreign banks. In addition, the Banking Association believes threatens EU legal problems due to an unequal treatment of domestic and foreign investors. Instead of the proposed holding period, the association proposes a flat-rate tax of 5 percent.

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