BERLIN German Finance Minister Wolfgang Schaeuble dismissed criticism on Thursday that he waited too long to ban a practice that let two parties claim ownership of the same shares and cost the state billions of euros in tax.
The double ownership loophole, which allowed both parties to claim tax rebates, was closed in 2012. It sparked anger in Germany and embarrassed Schaeuble, who regularly lectures other countries about the need to crack down on tax avoidance.
A parliamentary inquiry is looking into the matter and Schaeuble, who became finance minister at the end of 2009, gave evidence on it on Thursday.
Schaeuble said he had only become involved in dealing with the loophole a few months after taking office. In mid-2010, he decided to alter the system and that process took a long time, he said. In addition, banks needed time to adjust to the new system so the change came into force only in Jan. 2012.
The schemes centres on "short sales" - the sale of borrowed shares. A bank would loan out the stock in a way that made both the bank and eventual buyer appear briefly to be simultaneous owners of the shares. This allowed both parties to receive a divided tax rebate.
Schaeuble also defended financial sector regulator BaFin.
"It is not the job of BaFin to check the enforcement of tax laws," he said, adding that its remit was rather to guarantee the solvency of banks and the stability of the financial system.
Opposition lawmakers from the Greens and radical Left party have criticised the ministry and regulators for failing to exchange information. Schaeuble said it was up to the tax authorities in Germany's 16 federal states to ensure banks were adhering to the rules.
(Reporting by Matthias Sobolewski; Writing by Madeline Chambers; Editing by Tom Heneghan)