Banking institution, Warburg, loses court battle over controversial million-dollar lawsuits - Banking giant Warburg embroiled in a dispute over a substantial $1,000,000 debt
In a legal battle that has been ongoing for several years, the Federal Finance Court in Munich has ruled against Warburg Bank in a dispute over tax refund claims amounting to tens of millions. The bank, which is based in the city of Hamburg, had been attempting to reclaim 155 million euros it paid in 2020, related to the Cum-Ex tax fraud scandal.
The dispute took place in the context of the Cum-Ex scandal, a tax evasion scheme that has caused significant financial losses to the German state. The scheme, which involved stock traders buying and selling dividend claim stocks among several parties around the dividend record date, resulted in the refund of capital gains tax that had not been paid.
The Hamburg Finance Court had previously ruled that the tax refund claims against Warburg Bank were justified. However, the Federal Finance Court in Munich rejected Warburg Bank's appeal, deeming the Hamburg Finance Court decision from November 2023 not admissible for revision. The bank argued that the claims were time-barred, but this argument was not accepted by the court.
The parliamentary inquiry committee of the Hamburg Parliament had also investigated possible influence by leading Hamburg SPD politicians on the tax case involving Warburg Bank. However, no evidence of influence was found by the time the inquiry concluded earlier this year.
Max Warburg, a representative of the bank, was involved in meetings with then-Mayor Olaf Scholz in 2016 and 2017. Scholz, who is now the Chancellor of Germany, has always rejected allegations of influence. He claims not to remember the meetings with the bankers.
The tax authority demanded the 155 million euros from Warburg Bank for the years 2007 to 2011, among other reasons, due to the refund of unpaid capital gains tax in fraudulent Cum-Ex transactions. Warburg Bank paid the 155 million euros under protest and has since been trying to recover the sum through legal means.
The case is marked as Case No. 6 K 228/20 in the Hamburg Finance Court. The tax treatment of Warburg Bank has been a political issue in recent years, with the city of Hamburg being associated with the political and legal issues surrounding the bank.
This decision was finalized in November 2023 and upheld by the Munich Federal Finance Court in 2024. Warburg Bank must now "say goodbye" to these repayments and cannot recover the money from the tax administration.
[1] The term "say goodbye" is used metaphorically to indicate that Warburg Bank cannot recover the 155 million euros from the tax authorities. The actual legal term would be different.
