Real Cases

Some casual readers would for sure argue this cannot be true and it is all some theoretical nonsense and the Bindingsteuer antagonists are some kind of cult believers who have blind faith in the theoretical and non-real evil of the Bindingsteuer, therefore suffering the same problem as Saint Augustine, who said: "Faith is to believe what you do not see".

But in this case seeing is believing and one can see. Although a lot more cases are known and people report their cases with sparse details in different online forums, for obvious privacy reasons, there are well-known cases, which can be discussed.

And they are backed by respected reputable agents.

Case 1 - Bundesfinanzhof Decision - : VIII B 113/23

Nothing better than to start with a court decision which confirms everything is real.

The Bundesfinanzhof decision can be found here: BFH VIII B 113/23 . The summary:

Not compliant with Art. 3 Paragraph 1 of the Constitution : "All people are equal before the law".

This case comes from the Finance Court of Rhineland-Palatinate: 1-V-1674/23

The decision can be found here: RLP FG 1-V-1674/23 .

Note: The decision was appealed by the Tax Office (Finanzamt) and has the following reference number in the Federal Fiscal Court (Bundesfinanzhof): "BFH VIII B 113/23".

And the title is ...

"Verfassungsmäßigkeit der Verlustverrechnungsbeschränkung bei Termingeschäften zweifelhaft".

which translated to plain English is:

"Constitutionality of the Limitation on Loss Offset in Futures Trading Doubtful"

This decision is peculiar because:

It Stops Expropriation

Yes, literally. The taxpayers had a net profit of 23,342 EUR and the Tax Office (Finanzamt) using the magic of the Bindingsteuer wanted a tax payment of 59,860 EUR.

I.e.: 100% of the 23,342 EUR in net profit plus an additional 36,518 EUR to be paid directly from the private assets of the taxpayers, what anyone with common sense calls expropriation.

The Finance Court has decided "quickly" because the initial issue to clarify is whether the taxpayer has to oblige and dig deep into the pockets.

The Finance Court has stopped the expropriation until it makes a full decision. But because this is a Finance Court and the court doubts the constitutionality, it can only decide on the issue after a decision from the Federal Constitutional Court. Still some years away.

and therefore:

Success

Even the Finance Court judges doubt the constitutionality
The Math (for Children) is right and the taxing happens as explained (see also the numbers below, reported by the Frankfurter Allgemeine article)
Expropriation is legalized by the law (luckily and so far, stopped by the Court)

Hallelujah brother! The faith in basic math is confirmed and the Bindingsteuer taxes people with rates above 100%. The calculations will be done below, but even reputable newspapers report the obvious.

Frankfurter Allgemeine Zeitung

Original

Das Finanzgericht Rheinland-Pfalz bezweifelt die Verfassungsmäßigkeit des Steuergesetzes über die Verrechnung von Verlusten. Im verhandelten Fall sollte ein CFD-Anleger 256 Prozent Steuern zahlen.

Translated

The Finance Court of Rhineland-Palatinate doubts the constitutionality of the tax law concerning the offsetting of losses. In the case under discussion, a CFD investor should pay 256 percent in taxes.

Link: FAZ - Report on RLP Finance Court Decision

Martin Hock also wrote an opinion article on the topic. The entire article is spot on, but is especially important to quote the conclusion. Link: Martin Hock - Bindingsteuer - Opinion

Quote

Original

Nicht auszudenken, wenn Steuern in Deutschland grundsätzlich so gemacht würden. Und wieder liegt die Wacht über die Demokratie in Karlsruhe und nicht in Berlin. Traurig.

Translation

One can only imagine if taxes in Germany were fundamentally made like this. And once again, the guardianship over democracy lies in Karlsruhe and not in Berlin. Sad.

Obviously if all taxes were made like the Bindingsteuer it would be a banana-republic. And for him it is obvious that because of things like the Bindingsteuer and its creators, democracy has to be sorted and guarded in Karlsruhe (Federal Constitutional Court) instead of in Berlin (Parliament).

Other media reports included for example Handelsblatt:

Handelsblatt - RLP FG

The Numbers in Court

Because the court decision is public, the actual numbers can be calculated. Let us do it!

The Taxpayer Numbers

These are the actual winnings/losses of the taxpayer in the trading year. Quote from the court decision. Facts - Paragraph 3:

250,631 EUR Winnings from Derivatives
227,289 EUR Losses from Derivatives

(what yields a net profit of (227,631 - 227,289 = 23,342 EUR)

The Tax Office Numbers

Quoting from the court decision, Paragraph 5, figures from the Tax Assessment Notice (Steuerbescheid):


Winnings from Derivatives	250,631
Offsetting of current losses from futures trading i.S.d. § 20 Abs. 6 Satz 5 EStG	20,000

Offsetting of loss carryforwards from capital assets without losses from the sale of shares	15,203
minus Saver's allowance	1,602

Income from capital assets	213,826

Notice the 2nd row in the table which specifically references the Bindingsteuer, albeit formally with "§ 20 Abs. 6 Satz 5 EStG": 20,000 EUR are being offset in losses.

The Bindingsteuer has magically transformed the yearly losses of 227,289 EUR in 20,000 EUR

And the new net profit, i.e.: the fake virtual Binding-Net-Profit, to be used for the tax calculation is:

Binding-Net-Profit = 250,631 - 20,000 = 230,631

The law has changed a net profit of 23,342 EUR into a fake virtual Binding-Net-Profit of 230,631 EUR.

Wow!

The Binding-Tax-Rate == 247%

Because the other values in the table, like the "Saver's Allowance" are fixed and also small, and for the purpose of calculating the actual tax rate applied exclusively to the capital gains from derivatives, those values will be ignored (they will only increase the rate, albeit slightly). The basic (and fixed) tax rate for capital gains is 25%. Let us do the math.

Binding-Tax-Rate = 25% * (Binding-Net-Profit / Net Profit)
Binding-Tax-Rate = 25% * (230,631 / 23,342)
Binding-Tax-Rate = 25% * (9.88)
Binding-Tax-Rate = 247%

As expected, if one considered all items in the table, the tax rate would even higher and Martin Hock, author of the "Frankfurter Allgemeine" article, reported 256%, having calculated the rate considering all terms, whilst the calculation here has exclusively focused on the effects of the Bindingsteuer part.

Expropriation in Play

Recall that anything above 100% means that the taxpayer has to dig deep in the pockets. The taxes are no longer paid from the profit but directly from private assets.

In one word: Expropriation.

Case #2 - Max - "The Infinity-Millennium Trader"

No, Max is not a super-hero from Marvel in a new "Infinity" saga which happens over the span of a Millennium.

Although Max has to be considered a super-hero for having the courage to present his case in public. That he hid his identity behind that of his tax advisor is just normal to avoid potential reprisal against his person.

Prof. Dr. jur. Christopher Juhn

Prof. Dr. jur. Christopher Juhn is the one making the case public. As his title indicates he is a University Professor, for Tax Law, is a jurist and also holds a PhD.

To add to the insult, he also is a "Guest lecturer for tax officials" at the Federal Finance Academy in the Ministry of Finance.

Link: www.juhn.com

The case was presented in a Youtube video: Youtube Link

The "Infinity" Binding-Tax-Rate

The numbers show why Max, the shadowed taxpayer, is "The Infinity Trader". Being in the cover frame of the video and already summarized by Pror. Dr. jur. Juhn, the calculation of the Binding-Tax-Rate is easy.

"The Infinity Trader" numbers

Winnings: 15,000,000 EUR
Losses: 15,000,000 EUR
Net Profit: 15,000,000 - 15,000,000 = 0 EUR
Binding-Tax-Amount: 4,000,000 EUR

Binding-Tax-Rate: Net Profit / Binding-Tax-Amount
Binding-Tax-Rate: 4,000,000 / 0 = Infinite

There will, for sure, soon be a Marvel movie about this new Infinity () wonder.

Private Bankruptcy

Given how serious all this is, things are presented with irony and sarcasm, to alleviate some of the stress caused by the Bindingsteuer.

This, by no means, oversees how serious the situation of Max is, because his only current option, as mentioned in the video, is "Private Bankruptcy".

The "Millennium" Eternal Binding-Losses

Remember that the title assigned to Max does also contain the term "Millennium", i.e.: 1000 years. This is almost the time span he would need to recover from taxes and the eternally growing unrecoverable Binding-Losses.

Recall that the losses which have not been offset, can be carried over into the following years, but only to a maximum of 20,000 EUR per year.

749 Years Across the Dessert

Binding-Losses: 15,000,000 - 20,000 = 14,980,000 EUR
Binding-Years: 14,980,000 / 20,000 = 749 years

Yes, 749 years is what Max would need to recover the eternally growing unrecoverable Binding-Losses. But wait, there is more. He also needs to recover the 4,000,000 EUR in Binding-Taxes. Let's use the omnipresent Binding-Offset-Limit of 20,000 EUR as his expected winnings to undo the taxes.

949 Years: Entering the Millennium

Binding-Losses: 15,000,000 - 20,000 = 14,980,000 EUR
Binding-Years: 14,980,000 / 20,000 = 749 years

Binding-Years-From-Binding-Taxes = 4,000,000 / 20,000 = 200 years

Total Binding-Years = 749 + 200 = 949 years

Yes, this is like a prison sentence, the 749 years and 200 years run in parallel, but like when someone is sentenced to prison, all years are reported. And these many years is like a prison sentence.

Wow!!

A total of 949 years trading to recover losses. But this, in reality, is all a fiction. Not even in a million years would Max recover his losses.

The Binding-Losses are Eternal

To recover the Binding-Losses the trader has to trade with derivatives, because the law forbids cross-compensation with, for example, winnings from shares.
But in trading derivatives, the trader is limited by the 20,000 EUR Binding-Offset-Limit.
Because PERFECT trading does not exist, the trader will hit again the Binding-Offset-Limit and not be able to recover the Binding-Losses
The trader will actually add more eternally growing unrecoverable Binding-Losses adding years and years of expected recovery time.

Conclusion: The eternally growing unrecoverable Binding-Losses are in fact eternal and it is not just that a fancy title has been assigned to them.

This is akin to what Sisyphus had to endure, pushing the boulder up the mountain, only to see it roll downwards, being forced to repeat the feat, which will never be achieved.

Once again, reality has surpassed fiction and the Bindingsteuer has made "The Myth of Sisyphus" a reality.