It’s his process. And so the famous tax attorney Hanno Berger enters the hall of the Wiesbaden district court: self-confident and determined with a discounter water bottle in his hand. Only the tie has slipped a bit.
Berger is 71 years old, probably a multi-millionaire, and lives in Switzerland. However, he currently lives in the JVA Frankfurt 1. The reason: He is said to have cheated the state out of a lot of money. He is considered the spiritus rector of the cum-ex deals, in which banks and other investors cheated the tax authorities by a double-digit billion amount.
Specifically, the public prosecutor’s office accuses Berger on the first day of the trial of having obtained certificates for a good 113 million euros in unpaid taxes. The second trial against Berger began on Thursday. It is already clear that he will fight to the end to prove his innocence. He’s clearly convinced of that himself.
In any case, there is little evidence of humility in Berger. He’s acting here as a lawyer, not a defendant. Already at the beginning of the procedure he instructs that the Plexiglas to protect against infection between him and his defense lawyers should be dismantled.
When the indictment is read out, he listens carefully, takes notes, shakes his head, and takes notes. Most of the time, his defense attorneys just listen, read the documents, rarely typing anything on their laptops.
When one of the two defense attorneys got up during the reading of the indictment and rummaged in his pocket for a cable, Berger looked horrified. It is obvious that he would like to rebuke him. The indictment is read out for several hours, and Berger is almost always highly concentrated.
When the prosecutor explains the cum-ex procedure, he stops taking notes. He shakes his hands and just shakes his head. Berger advised banks and investors on so-called cum-ex deals. In these, investors pushed shares with (“cum”) and without (“ex”) dividend rights back and forth around the dividend record date. The aim was to refund capital gains taxes that had not been paid at all.
For a long time it was unclear whether these deals were illegal. In fact, buying and selling shares around the dividend record date was profitable simply because there are differences in the taxation of residents and foreigners.
Only residents were able to have the capital gains tax that was withheld from their dividends by the distributing company offset. Accordingly, foreigners sold their shares to residents shortly before the general meeting and bought them back a little later.
However, the business got into the gray area at the moment when investors sold shares around the general meeting that they did not own at the time, so-called short sales. Then suddenly there were more shares on the market than the company had actually issued.
As a result, more credits were created than taxes were actually paid. The state itself had created a legal basis for this with the Annual Tax Act 2007 and thus legalized the business – at least that’s how the tax lawyers felt. The Federal Court of Justice ruled in 2021 that cum-ex transactions are to be classified as tax evasion.
Before the Wiesbaden court, Berger is accused of having traded Dax shares with a volume of 15.8 billion euros in transactions with a wealthy real estate investor together with former employees of HypoVereinsbank in Munich and London. The profits were divided. The Attorney General’s Office spoke on Thursday of multi-stage transactions “without an economic purpose”, which would only have served to conceal the matter.
If you believe the prosecution, Berger would be a fraud and criminal. But how could this happen? Berger comes from a family of lawyers and theologians. His father was a pastor in Frankfurt/Main, other relatives made careers in the civil service. He himself first worked for the Frankfurt tax office before starting his career as a lawyer.
At the beginning of the millennium, Berger earned his money primarily by minimizing taxes on interest income through complicated constellations. But after the financial crisis, these deals lost their attraction due to the low interest rates. The cum-ex deals became all the more popular. Berger only found out about these stock deals in 2004, but then got involved all the bigger.
And has apparently lost the measure. Berger once said of himself that he had a great longing for down-to-earthness. He felt at home in rural Schluechtern.
He bought land there and has his own timber company. In the meantime he rented a gravel pit to dig around in it a little. He dreamed of driving a tractor across the fields after leaving the law firm. But things turned out differently.
In 2012, his private home and practice were searched by the tax investigators. His office had to close. Berger moved to his home in Switzerland. But he wasn’t able to enjoy the sophisticated mountain village much. He dealt with Cum-Ex almost every day. Collected evidence that he is right.
When a cum-ex process began in Wiesbaden in March 2021, Berger stayed away. He was unable to stand trial, his lawyers said, with a view to his health. He had done “nothing wrong” and would be prejudiced, he later said in an interview with the business magazine “Capital”.
To the end, Berger resisted his extradition to Germany, which the judiciary in Hesse and North Rhine-Westphalia had requested. After being arrested in the canton of Graubünden, he has been in extradition custody since mid-2021.
Berger resisted in all legal instances, but in the end the Swiss Federal Office of Justice approved the extradition. At the end of February, the Swiss police handed Berger over to officials from the Federal Criminal Police Office in Konstanz.
He has been in custody for months now. Friday is the second day of the trial. This is to decide whether the public defenders, who were only recently assigned to Berger, should be given more time to familiarize themselves and the procedure must therefore be suspended.
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