The Cum-Ex Affair: Legal Lessons from Germany’s Largest Financial Scandal Since World War II

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Abstract:

The Cum/Ex affair is not just the largest financial scandal in post‑war Germany, with tax losses in the double‑digit billion range, but a paradigmatic case of an industry‑wide breakdown of norm enforcement. 

Unlike firm‑specific scandals such as Wirecard or Diesel, Cum/Ex was structurally embedded across almost the entire German and European financial sector: banks, brokers, stock exchanges, clearing houses, institutional investors, and law firms jointly enabled the systematic multiple refunding of a single withholding tax on dividend‑bearing shares, while compliance and supervisory structures remained formally intact. Reconstructing Cum/Ex as a sectoral scandal shifts attention from individual masterminds to the neglected role of large financial and market‑infrastructure institutions that adjusted their products and trading architecture to facilitate these trades. The scandal thus appears as a crisis of “norm assertion” at the intersection of tax law doctrine and institutional enforcement capacity: only the combination of interest‑driven legal interpretation, legislative inaction, and a fragmented, under‑resourced prosecution apparatus allowed clearly abusive but technically sophisticated schemes to remain profitable on a multibillion‑euro scale for multiple years. 

Cum/Ex is therefore a high‑leverage case for economists and lawyers to study how legal coding of capital, enforcement frictions, and infrastructure incentives interact, and to derive proposals for tightening abuse‑of‑law standards and sham‑transaction doctrine while redesigning institutional responsibilities for complex financial crime and the regulation of key market infrastructures.