The reassessment of Cum/Cum structures under German criminal law following the decision of the Frankfurt Higher Regional Court (Oberlandesgericht – OLG) of 10 Decem-ber 2024 has now also prompted action by the Germany’s financial watchdog, the Federal Financial Supervisory Authority (BaFin).
In a recent inquiry issued in December 2025, BaFin requires supervised entities to provide comprehensive information by early March on potential exposures arising from the tax treatment of Cum/Cum transactions. This inquiry goes well beyond previous information requests. It is expressly issued against the backdrop of the increasingly intense debate in tax and criminal law and therefore also covers periods that are tax-relevant only if the underlying transactions are classified as criminal conduct. In addition, the inquiry is intended to support BaFin’s assessment of governance and business organisation pursuant to section 25a of the German Banking Act (KWG).
For the institutions concerned, this results in significant legal, regulatory and operational challenges. These range from the need for new and more in-depth transaction analyses, to potential parallel disclosure obligations vis-à-vis the tax authorities in order to mitigate criminal tax risks, and on questions concerning the design and adjustment of tax compli-ance frameworks.
This brief article provides an overview of the key challenges arising from BaFin’s current Cum/Cum inquiry.
The tax treatment of “Cum/Cum transactions” and other tax-driven securities lending arrangements around the dividend record date has occupied the German financial industry and tax authorities for many years.
Until now, public and media attention regarding alleged tax fraud has largely focused on Cum/Ex cases. Their criminal nature has since been confirmed by the Federal Court of Justice (Bundesgerichtshof – BGH). Although Cum/Ex and Cum/Cum transactions are similar in name, they are structurally very different.
Put simply, Cum/Cum structures are designed to arrange share transactions around the dividend date in such a way that foreign shareholders are able to benefit economically from tax credits or refunds on domestic dividend income, similar to domestic taxpayers – even though, under the statutory framework, such benefits are not available to them, or at least not to the same extent.
Illegal Cum/Ex transactions, by contrast, were aimed at obtaining a double or even multiple refund of capital gains tax that had only been paid once to the German tax authorities. In other words, they involved a direct and deliberate extraction of tax funds and were in some cases pursued with considerable criminal energy.
Nevertheless, the tax revenue loss attributable to Cum/Cum structures is substantial. In Germany, it is estimated in part to exceed EUR 28 billion, which would make it more than twice as high as the losses caused by Cum/Ex transactions.
Unlike Cum/Ex, Cum/Cum structures were already classified as impermissible tax arrangements by the Federal Fiscal Court (Bundesfinanzhof – BFH) in 2015, and subse-quently by fiscal courts in numerous cases. However, a criminal law prosecution compa-rable to that of Cum/Ex cases did not materialise for a long time. This has now changed perceptibly as a result of the OLG Frankfurt decision of 10 December 2024 (3 Ws 231/24), which for the first time allowed an indictment for tax evasion based on tax-driven securities lending transactions. This decision is likely to have significant signalling effects for the criminal law treatment of Cum/Cum structures more generally.
Correspondingly, tax authorities – particularly in the German federal state of North Rhine-Westphalia – have adopted a noticeably more aggressive approach to Cum/Cum struc-tures. Similar to the OLG Frankfurt’s view, criminal tax allegations are being raised, and banks are being assessed for taxes arising from Cum/Cum transactions carried out more than 20 years ago in some cases.
BaFin has now taken up this development and expressly justifies the need for what is now its fourth Cum/Cum inquiry (following those in 2017, 2020 and 2021) by reference to the “increasing discussion in tax (criminal) law”.
Notably, BaFin does not regard the inquiry as relevant solely from a prudential risk perspective. Rather, it explicitly points out that participation in Cum/Cum transactions may also affect how BaFin assesses the governance and proper business organisation of supervised entities. This confirms our experience from BaFin special audits and statutory audits in connection with Cum/Ex cases: the handling of tax risks in the financial sector has firmly moved into BaFin’s focus. From BaFin’s perspective, tax compliance in the financial sector is therefore no longer an isolated task of the tax department, but part of the institution’s overall compliance organisation within its non-financial risk (NFR) management and subject to the statutory requirements for proper business organisation under section 25a KWG.
Distinction from Cum/Ex
The comparatively lower level of attention paid to Cum/Cum transactions over many years was also reflected in their legal assessment, particularly under German criminal law.
The reluctance to treat Cum/Cum structures as criminal was largely based on their structural distinction from Cum/Ex. Cum/Ex transactions were deliberately designed to obtain multiple refunds or credits of capital gains tax without corresponding tax pay-ments having been made. Cum/Cum arrangements, by contrast, were “merely” intended to reduce the tax burden on domestic investment income for non-resident taxpayers as far as possible and to place them economically on a par with domestic taxpayers.
Against this background, the prevailing market view for a long time was that Cum/Cum arrangements did not fulfil the objective elements of tax fraud.
Decision of the Wiesbaden Regional Court
This view was still confirmed at the beginning of 2024 by the Wiesbaden Regional Court (Landgericht – LG). In its decision of 12 February 2024 (6 KLs 1141 Js 23929/12), the court refused to open main proceedings in relation to tax-driven securities lending transactions and denied the existence of the objective elements of tax fraud.
This decision reflected the long-standing market consensus and formed the basis for numerous internal review projects at financial institutions. It also often determined the scope of responses to BaFin’s previous Cum/Cum inquiries in 2017, 2020 and 2021.
Decision of the Frankfurt Higher Regional Court
However, with its decision of 10 December 2024 (3 Ws 231/24), the OLG Frankfurt called this line of reasoning into question. Contrary to the view of the Wiesbaden Regional Court, the OLG assumes that Cum/Cum structures can, in principle, meet the elements of tax fraud.
The decision was based on a tax-driven securities lending programme in which a domes-tic taxpayer lent fixed-income securities to a non-resident taxpayer and, in return, received German shares as collateral over the dividend record date. The tax benefit for the non-resident was realised through compensation payments between the parties. One of the particular features of the case was that the shares provided as collateral were subject to a prohibition on disposal, meaning that the domestic taxpayer could not freely dispose of them. This had decisive implications for the attribution of beneficial ownership of the shares and for the assessment of abuse under sections 39 and 42 of the German Fiscal Code (AO).
Despite these specific features – which may indeed not have been present in many other market structures – the decision has considerable signalling effect. For the first time, it clearly establishes that Cum/Cum transactions are not per se outside the scope of criminal relevance.
Consequences for Limitation Periods and Risk Analysis
The potential classification of Cum/Cum arrangements as tax fraud has significant practical consequences. In particular, the relevant limitation periods are substantially extended. Completed Cum/Cum review projects and tax corrections may therefore prove to be incomplete. While some institutions have responded to these developments with new analysis projects, others have so far taken no further action.
BaFin’s Inquiry of 15 December 2025
Against this backdrop, BaFin sent a new, comprehensive inquiry to financial institutions at the turn of the year 2025/2026. The aim is to reassess existing risks arising from Cum/Cum structures and their impact on financial market stability.
The inquiry explicitly refers to the OLG Frankfurt decision and is notable for its broad temporal scope: transactions dating back to 2010 are covered. Such a time frame is only tax-relevant if extended limitation periods of ten or even fifteen years apply as a result of a classification as tax fraud.
Although BaFin had already sent similar inquiries in 2017, 2020 and 2021, the current request represents a new level of intensity. Earlier inquiries could often be answered on the basis of the then prevailing assumption that Cum/Cum did not constitute tax fraud. As a result, analyses were typically limited to periods that were not yet time-barred for tax purposes, applying the standard four-year limitation period.
This approach is no longer readily available. The new inquiry forces institutions to include much earlier years if they could still be risk-relevant due to extended criminal limitation periods of up to fifteen years.
Important note:
The transaction analyses required to respond to BaFin’s inquiry should, as a matter of urgency, be accompanied by considerations as to whether and to what extent the results may need to be disclosed to the tax authorities in order to mitigate criminal tax risks – for example under section 153 AO (correction of tax returns) or even section 371 AO (voluntary disclosure). In individual cases, it may therefore be advisable to extend the analysis period beyond 2010.
Current developments significantly increase the pressure on financial institutions. Institutions that have already carried out comprehensive and complete Cum/Cum analyses in recent years are generally in a position to respond to the new BaFin inquiry in a robust manner.
By contrast, institutions that have not yet fully examined periods back to 2010 face considerable challenges. Until the beginning of March 2026, they must not only prepare well-founded responses to BaFin, but may also need to reassess the tax treatment of transactions from long-past years. This requires an extremely complex and data-intensive process.
Irrespective of this, the central legal question remains unresolved: whether Cum/Cum structures, in all their variants, ultimately qualify as tax fraud has not yet been conclu-sively clarified by German criminal courts. Regulatory and criminal law pressure on financial institutions is nevertheless continuing to increase – and is unlikely to abate in the short term.
How We Can Support You
ADVANT Beiten’s Tax and White-Collar Crime practice in the financial sector specialises in the prevention, management and resolution of tax and criminal law risks in the financial industry. As a highly specialised team with many years of sector experience, we combine criminal law expertise with in-depth tax law and regulatory know-how.
Our advisory focus includes tax and white-collar criminal law, tax controversy, anti-financial crime and financial sanctions, as well as all related compliance topics and the conduct of internal investigations.
In addition to preventive advice, we comprehensively defend companies and individuals in tax and white-collar criminal matters and represent them before tax and regulatory authorities (including BaFin). All lawyers in the team are also qualified as Certified AML & Anti-Fraud Officers.
Our team supports you in providing legally sound responses to BaFin’s current inquiry. We assist with the design and operational implementation of the necessary transaction analyses, considerations regarding potential disclosure obligations to the tax authorities to mitigate criminal tax risks, and the possible implications of investigation results for BaFin’s assessment of governance and business organisation.
Martin Seevers, LL.M.
Julian Niederlein
