The cum-ex affair and the limits of custody

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The cum-ex affair, which shook the German financial system in the 2010s, reached Basel through the involvement of Swiss banks and investors. Cum-ex transactions were trades in shares around the dividend date, structured so that the German tax authorities refunded withholding tax on dividends that had been paid only once, sometimes several times. Exploiting a weakness in the German system of withholding tax refunds, the transactions cost the German treasury billions of euros before the loophole was closed in 2012. German courts later held that such transactions were tax evasion and could be criminal.¹

Several Swiss banks and investors were involved in cum-ex transactions as investors, as financiers or as custodian banks of funds that conducted them. Wealthy Swiss and German investors invested in funds that promised high returns from such transactions and lost their investments when the German tax authorities refused the refunds. Some of them sued the banks that had recommended the investments, arguing that they had not been informed of the tax and legal risks. The Swiss courts examined the liability of the banks for their advice, including in a case involving the Basel bank Sarasin, which reached the Federal Supreme Court.

The cum-ex affair is relevant to the practice of a lawyer who advises on tax criminal law and financial services, as the author does. The affair shows how the tax and legal risks of complex transactions can turn into criminal liability, how custody and advisory relationships can create liability for banks, and how cross-border cooperation between tax and criminal authorities has become routine. A Swiss bank that participates in a transaction designed to obtain tax refunds abroad must assess the legality of the transaction under Swiss law as well as its treatment under the law of the country whose treasury bears the cost.

Notes

On the cum-ex transactions and the decision of the German Federal Court of Justice (BGH) of 28 July 2021 (1 StR 519/20) confirming that cum-ex transactions constitute tax evasion, see the published decision and the literature. To be verified. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.

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Dr Alexander Ressos, TEP

Rechtsanwalt/Attorney-at-Law

I am a Swiss attorney-at-law and also admitted as a solicitor in Hong Kong and in England & Wales, with almost 25 years of experience.

Together with my multilingual team, including Chinese, Japanese, Korean, Russian, Ukrainian and French native speakers, I advise companies and their owners from around the world on the full range of banking, corporate, commercial and tax law matters in Switzerland, including international tax planning, fiduciary services, and legal family office services including immigration & relocation or real estate investments. My practice has a particular focus on clients from growth and frontier markets in Greater China, Central Asia and the Caucasus, the rest of Asia, the Middle East, Africa and Latin America, and I equally advise clients from Europe and North America. Through an affiliated Swiss trust company, we also take care of the incorporation and ongoing administration of their companies and other structures, including accounting, tax returns and corporate secretarial services, and I serve as a professional director where required. With the support of a network of first-class cooperation partners, I also implement solutions worldwide.

My approach is to act as a trusted advisor who works directly with decision-makers, on an equal footing: I start from what you want to achieve and shape every structure, contract and tax decision around your commercial goals and how it improves your after-tax return. As “lawyers who make it happen”, my team and I stay involved until your company is set up, your structure is in place and your transaction has closed, and we remain available for any follow-on work that may be required. You benefit from bespoke solutions and personal attention, and sound, friendly and practical advice. We are not the lowest-cost provider in the market, nor do we intend to be; our aim is to deliver well-founded, proper solutions and excellent value for money.

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The cum-ex affair and the limits of custody

Notes

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