It was an intricate tax scheme used by a number of high-net-worth individuals to wipe massive sums off their tax bills by manufacturing artificial losses on German bond deals. It required a string of interrelated companies, various put and call options and the deliberate impairment of asset values on German government bonds. In essence, it allowed investors to profit handsomely through the generation of paper losses. Indeed, one taxpayer was able to turn a cash outlay of €298,000 (backed up by an interest-free loan of €280,000) into a tax advantage of more than €531,000. The scheme was operated within a…

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