‘Cum-ex trading’ refers to a system of share-dealing intended to enable reclaims of capital gains tax ostensibly withheld at source on dividends paid by listed companies (‘withholding tax’) and carried out in various European tax jurisdictions in the late 2000s and early 2010s.

The cum-ex system first rose to prominence in 2017 following an exposé by a group of investigative journalists. However, it was not until July 2021 that the German Federal Court, following a handful of prosecutions, confirmed that the practice amounted to criminal tax evasion.

Since the practice came to mainstream attention, there has been a steady stream of criminal and civil actions, alongside regulatory investigations, of individuals and financial institutions across Europe allegedly complicit in the conduct or facilitation of cum-ex transactions. This has included extradition requests from the German, Belgian and Danish authorities for suspects to be extradited from the UK.

More recently, authorities in other European countries have commenced criminal and regulatory investigations into other forms of dividend arbitrage, including so-called ‘cum-cum’ trading.

Corker Binning has significant experience in advising regulated persons involved in investigations concerning dividend arbitrage (including both cum-ex and cum-cum trading) being conducted in various European countries.