The German Federal Court of Justice (BGH) has confirmed a three-and-a-half-year prison sentence for former Freshfields tax partner Ulf Johannemann, following his conviction for aiding serious tax evasion in connection with the Cum-Ex scandal. This marks a major milestone in Germany’s fight against what is considered the country’s most complex tax fraud case.
Background: The Cum-Ex Scandal
The Cum-Ex scheme involved rapid trading of shares around the dividend cutoff date, creating confusion over ownership and enabling multiple parties to claim tax refunds for taxes that had only been paid once. Between 2001 and 2016, this practice resulted in Germany losing roughly €30 billion. Banks, brokers, and their advisors exploited this loophole, presenting it as legal tax optimization, although the courts later clarified these were cases of deliberate and aggravated tax evasion.
Details of the BGH Ruling
Ulf Johannemann—formerly Head of Global Tax at Freshfields—provided German bank Maple Bank with legal opinions that downplayed the risks and legality issues of Cum-Ex transactions. The BGH established that his legal advice omitted major counterarguments and gave executives a false sense of legal certainty, facilitating trades that led to €374 million in state tax losses. His conviction affirms that enabling or justifying such schemes through manipulated legal assessments constitutes criminal participation in tax fraud.
This decision expands criminal liability not only to dealmakers and banks but also to external legal advisors whose work plays a critical role in facilitating criminal financial schemes. The courts believe the responsible Maple Bank managers would not have undertaken these trades without Johannemann’s misleading guidance.
Implications for Legal and Financial Sectors
The latest BGH ruling sets a precedential tone for ongoing and future cases involving Cum-Ex and other tax structuring abuses. Legal opinions and advisory notes, especially those used to justify high-risk financial constructions, will be subject to ever closer scrutiny, and their authors may face criminal prosecution if found complicit. This is a clear warning to legal and financial professionals against using expertise to “legitimize” dubious, abusive tax minimization structures.
The judgment also strengthens prosecutors’ ability to pursue enablers—including law firm partners and compliance advisors—who make large-scale tax fraud possible. Several more high-profile trials involving lawyers and bankers are expected, with the German judiciary showing resolve to recover billions lost to such schemes.
Conclusion
The BGH decision marks a new legal era in the fight against complex financial crime in Germany, demonstrating that criminal accountability reaches beyond direct perpetrators to include those providing legal and regulatory cover for fraudulent activities. The case serves as a clear message: expert advice that facilitates large-scale public harm through deliberate evasion will result in serious personal consequences.
