May 3, 2016 / 9:52 AM / a year ago

Commerzbank to stop offering tax loophole deals to clients

2 Min Read

A pedestrian walks past a branch of Commerzbank located in its headquarters before the bank's annual news conference in Frankfurt, Germany, February 12, 2016.Ralph Orlowski/File Photo

FRANKFURT (Reuters) - Commerzbank (CBKG.DE), which faces criticism for helping investors exploit tax loopholes in Germany, will stop offering such tax deals in anticipation of new legislation, Chief Financial Officer Stephan Engels said on Tuesday.

German Chancellor Angela Merkel's cabinet in February drafted a law which, if approved in parliament, would grant foreign investors the same tax status as domestic investors.

Under current law, domestic funds are exempt from paying corporate income tax on revenue related to dividends and real estate, while foreign funds are required to pay 15 percent tax on such gains.

That has led to a widely used tax-evasion scheme - in which Commerzbank is seen as one of the most active players - which a report by public TV station Bayerischer Rundfunk said has cost Germany 5 billion euros ($5.78 billion) in taxes since 2011.

"You can assume that we have prepared for this draft law since the start of the year and have adjusted our business accordingly," Engels said.

Reporting by Arno Schuetze

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