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Vienna, 07.03.2019 Combatting fraud: Austrian Attorney General‘s Office and Public Prosecutor's Office take up cum-ex cases Austrian Attorney General’s office calculates losses of EUR 108 million for the period 2011 to 2013

Vienna (OTS) – Potential cases of the "cum-ex" tax fraud model, a fraud scheme used in Austria until 2013 (but especially from 2011 onwards), have now been investigated by the Federal Ministry of Finance, which has compiled a report on them. Media speculations in 2018 that losses in Austria would total several hundred million EUR have not proven true. Wolfgang Peschorn, head of the Austrian Attorney General’s Office, and Christian Pilnacek, Secretary General of the Ministry of Justice, presented the main results of their investigation at a press conference.

In a cum-ex scam, two applicants claim a refund of the capital gains tax (CGT) from the revenue, although only one is entitled to it. In other words, under this type of tax fraud, shares with entitlement to dividends (cum dividend) are sold shortly before the dividend record date, but delivered without entitlement to dividends (ex dividend) after the dividend record date, and both the seller and the buyer claim a refund of the CGT. Consequently, payments made when an application for reimbursement of CGT was filed were unjustified. In short, more capital gains tax was refunded by the state than was paid. The complex construct has made it almost impossible for the tax office to detect the fraudulent intent underlying the applications.

After the tax fraud model came to light in 2013, the Federal Ministry of Finance immediately put a freeze on payouts, averting a loss of 38 million. Subsequently, legislative changes were adopted and a separate team for CGT refund applications was set up to curb this fraud. The report states that the "potential losses" during the period 2011 to 2013 were limited to EUR 108 million.