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Freshfields Bruckhaus Deringer’s former global head of tax was sentenced to three years and six months in jail on Tuesday, in a landmark ruling by Frankfurt district court as he was found guilty of aiding and abetting a multiyear dividend tax fraud.
Ulf Johannemann, who until 2019 was the “magic circle” firm’s most senior tax partner, had been on trial since September over advice given to Maple Bank, a defunct German subsidiary of Canada’s Maple Financial.
From 2006 to 2009, Maple reclaimed more than €388mn in dividend taxes it never paid. Johannemann had issued legal opinions stating that those so-called cum-ex deals, which exploited a design flaw in the German tax code, were lawful.
The sentence is below the five-and-a-half years in jail that prosecutors sought for Johannemann. His lawyer had called for a suspended jail term of fewer than two years.
During the trial, Johannemann acknowledged he had “glossed over the fact that my legal advice was used for illegal means”, and said he had “totally failed” as a lawyer.
Freshfields was not a defendant in the trial. It struck a €10mn deal in 2021 to settle criminal allegations, and has paid €50mn to the administrator of Maple Bank to settle a civil lawsuit.
Prosecutors had argued that Johannemann “was not just a small cog in a large machine”, but that his tax department was “one of the main driving forces” of the cum-ex tax fraud. Johannemann, who earned close to €2mn a year at Freshfields, was arrested in 2019 but subsequently released on a €4mn bail.
The trial was the highest-profile yet stemming from the long-running scandal, which cost German taxpayers some €10bn, according to an estimate by Finanzwende, a consumer protection lobby group.
The fraud centred on share deals executed before and after a stock’s dividend payments that duped governments to reimburse taxes that were never paid in the first place.
