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By Dr. Katharina Wild (https://wild.legal/anwaeltin/)

On July 22, 2026, a raid was carried out at Deutsche Bank in Frankfurt. This time, investigators are focusing on cum-cum transactions by its subsidiary, Postbank.

According to a report in the Süddeutsche Zeitung, the investigation concerns Postbank's "Riesling" project from 2008 to 2010. Ten former bankers are accused. The alleged damages for joint tax evasion are said to amount to €350 million.

What is a cum-cum transaction?

In cum-cum transactions, foreign investors transfer their shares to German banks or funds shortly before the dividend record date. These banks or funds are exempt from capital gains tax on the dividends. After the record date, the foreign investors receive their shares back. The domestic bank receives a portion of the dividend. The German Federal Ministry of Finance (BMF) considers cum-cum transactions illegal in most cases.

What is the substantive legal situation for non-residents receiving domestic dividends?

If a non-resident receives dividends from Germany, capital gains tax of 25% must be withheld. Due to double taxation agreements, the capital gains tax withheld for non-residents is often partially refunded. As a rule, the final tax burden for the non-resident remains at 15%.

What is a cum-cum transaction for non-residents?

A cum-cum transaction occurs when a non-resident taxpayer avoids the final withholding of capital gains tax on dividend distributions by transferring their domestic shares to a domestic entity entitled to tax credit (i.e., a domestic bank) before the dividend record date and having them transferred back after the dividend payment.

The transfer of shares can be effected through a securities lending transaction, a cash transaction, or a repurchase agreement. Cum-cum transactions are structured in such a way that the domestic entity entitled to tax credit retains a percentage of the gross dividend.

How does the Federal Ministry of Finance (BMF) assess cum-cum transactions?

The BMF applies Section 39 Paragraph 1 of the German Fiscal Code (AO) to the tax assessment of cum-cum transactions:

According to Section 39 Paragraph 1 AO, assets are generally attributed to the legal owner. However, according to Section 39 Paragraph 2 No. 1 AO, the asset is not attributed to the legal owner if someone other than the legal owner exercises actual control over the shares.

In cum-cum transactions, legal ownership of the shares transfers to the borrower or purchaser upon the securities being credited to their account before the dividend record date. However, the contracts concluded in connection with the transaction ensure that beneficial ownership does not transfer to the legal owner. A final transfer of the opportunities and risks does not occur. The recipient of the shares transfers them back to their contractual partner after the dividend payout and bears no price risk, as they either

• receive the shares via securities lending,

• the sale price in the event of re-sale is already fixed as part of the arrangement, or

• the shares are hedged against price fluctuations during the holding period as part of the overall concept.

According to the Federal Ministry of Finance (BMF), the short holding period of the shares around the dividend record date is an indication of a cum-cum arrangement.

In addition, the BMF examines whether there is an abuse of legal structuring options under Section 42 Paragraph 2 of the German Fiscal Code (AO).

The actual purpose of cum-cum arrangements is to avoid the final withholding of capital gains tax on dividend payouts.

Circumventing this final withholding tax is abusive and results in a tax advantage not provided for by law.

As a legal consequence, the present situation is to be assessed as if an appropriate legal arrangement had been chosen.

What are the consequences of a cum-cum transaction?

The legal consequence is that the recipient of shares in a cum-cum transaction is not the taxable shareholder according to Section 20 Paragraph 5 of the German Income Tax Act (EStG). They are not entitled to a credit or refund of the capital gains tax withheld on the dividend payment.

The capital gains tax withheld on the dividend payment is not creditable against the recipient's tax liability or refundable to the recipient.

If no capital gains tax was withheld on the dividend payment or the withheld capital gains tax was refunded, the capital gains tax must be paid retroactively.

Are cum-cum transactions still possible today?

Since January 1, 2016, cum-cum transactions have been legally prohibited under Section 35a of the German Income Tax Act (EStG). Since then, a credit for capital gains tax is only granted if the share purchaser has held the share for at least 45 days during a period of 91 days around the dividend record date and has borne the price risk.

How high is the expected damage from Cum-Cum and Cum-Ex transactions?

Between December 2025 and March 2026, BaFin surveyed companies about their losses from Cum-Cum and Cum-Ex transactions. The results were published on July 13, 2026.

54 credit institutions, 18 insurers, and three companies from the securities sector potentially involved in Cum-Cum transactions participated in this survey.

The resulting financial burden is expected to amount to €4.82 billion.

This figure includes some payments already made. Provisions of €638 million have been set aside for potential future losses from Cum-Cum transactions.

What should be done if Cum-Cum transactions occur?

In cases involving cum-cum transactions, there is a reporting and correction obligation under Section 153 of the German Fiscal Code (AO) if the taxpayer subsequently realizes, before the end of the assessment period, that they have declared these transactions incorrectly or incompletely.

Banks must review the completeness of their tax returns in connection with dividend stripping with regard to Section 36a of the German Income Tax Act (EStG) and Sections 39 and 42 of the German Fiscal Code (AO).

During ongoing tax audits, cum-cum transactions should be communicated transparently to avoid tax-related criminal proceedings (especially searches).

For questions, please contact us: kanzlei@wild.legal