The German Fiscal Code provides for the possibility of a
voluntary self-disclosure of tax evasion. Taxpayers are able to
correct or complete their own incorrect tax returns or furnish
relevant information previously omitted. In such cases, the
taxpayer will be exempt from criminal prosecution for tax evasion
in respect of those previously incorrect, incomplete, or omitted
particulars. As a consequence of the ongoing media coverage on
prominent tax evaders in Germany, Bundestag and Bundesrat have
agreed on stricter requirements for voluntary self-disclosure. Such
new requirements entered into force on January 1, 2015.
I. Previous legal situation
In order to enjoy the statutory exemption from criminal
prosecution, a delinquent taxpayer had to meet the following
requirements for voluntary self-disclosure:
The delinquent taxpayer had to give complete and fully correct
data and figures to the competent revenue authority so to enable
the revenue authority to assess all taxes owed. A partial voluntary
self-disclosure was impermissible since 2011 and could lead to
Voluntary self-disclosure had to cover the complete period of
time for which criminal prosecution is not statute-barred. This
limitation period started with the completion of the offence and
amounted to five years in minor cases (taxes owed are less than
50,000 Euros for each year) and to ten years in more serious
The taxpayer had to pay all taxes owed within the deadline set
by the revenue authority.
Interest of 6 percent per year has been charged together with
the taxes owed. If taxes owed were in excess of 50,000 Euros, an
additional penalty of 5 percent of the tax owed was added.
Voluntary self-disclosure did not hinder criminal prosecution if
the delinquent taxpayer or his representative had already been
notified of the initiation of a tax audit or of criminal or
misdemeanor proceedings. The same holds true if an officer of the
revenue authority visited the taxpayer for the purpose of a tax
audit or criminal investigation. Finally, criminal prosecution was
not barred by a voluntary disclosure if the offence had already
been detected by the revenue authority and the taxpayer either was
aware of this fact or should have expected detection upon due
consideration of his case.
II. Adopted changes
German legislators now have decided to tighten the conditions
for exemption from criminal prosecution as follows:
The period of time a taxpayer must cover with complete and
fully correct data in order to be exempt from criminal prosecution
has generally been extended to ten years in all cases.
For certain cases of foreign capital gains the limitation
period for tax assessments has been extended to twenty (!)
The interest of 6 percent per year for all fiscal years lapsed
is due for payment immediately.
The additional penalty is already applicable if the total of
taxes owed is in excess of25,000 Euros. In case the total of taxes
owed is less than 100,000 Euros, the penalty has been raised to 10
percent of the taxes owed. If the total of taxes owed is in excess
of 100,000 Euros but less than one million Euros, the penalty is 15
percent. For all taxes owed in excess of one million Euros, the
penalty now is 20 percent of the taxes owed.
The additional penalty is due for payment immediately (together
with the taxes owed and the annual interest of 6 percent).
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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