Deutsche Bank has been punished with a heavy fine by the Frankfurt district court for helping to facilitate tax evasion by thousands of its customers.
Germany's largest bank has been ordered to pay a fine of EUR59.3 million, the public prosecutor announced last Friday. According to German daily Frankfurter Allgemeine Zeitung, part of the investigation was directed against the bank's board for allowing these illegal activities to continue whilst doing nothing to stop them. Customers who profited from the schemes have been ordered to pay millions of euros in back taxes.
Deutsche Bank is not the only bank which has attracted controversy over tax avoidance schemes. Earlier this year, Commerzbank was ordered to pay a fine of around EUR31.2 million for similar offences. Other banks that have fallen foul of the authorities include Dresdner Bank and West LB. Proceedings against Heleba are still in progress.
In what has been described by some as the biggest banking scandal in Germany since World War Two, the banks systematically helped thousands of customers avoid composite tax on interest earnings. They did this by opening branches in neighbouring tax havens such as Luxembourg, Switzerland and Liechtenstein, then advising customers to move untaxed earnings into accounts in these offshore braches, thus avoiding German taxes.
The government is currently trying to force a composite tax amnesty through parliament in order to increase revenue. However, the law is currently stalled due to opposition from the Christian Democrat majority.
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