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Tax evasion in Germany

Committing tax evasion and its consequences

Tax evasion is a critical issue in Germany, impacting both individuals and businesses alike. From legal implications to financial penalties, navigating the complexities of the German tax laws is crucial. In this article, we delve into the nuances of tax evasion in Germany .

What is tax evasion?

Tax evasion occurs when taxes are declared incorrectly or incompletely, or when there is an obligation to declare but no declaration is made at all. This results in taxes not being assessed, not being assessed in full, or not being assessed on time.

Tax evasion in Germany is a tax crime punishable by imprisonment or fines. The exact penalty depends on the amount of tax evaded . Approximately 5 years after the end of the offense (in serious cases of tax evasion only after 10 years), the statute of limitations for prosecution applies. This means that a criminal conviction can no longer take place.

If the offense is nevertheless discovered, the evaded taxes can still be demanded by the tax office even after the statute of limitations for criminal prosecution as soon as it issues the corresponding tax assessment notices within the assessment period in the knowledge or assumption of a tax-relevant situation.

Limitation period for tax assessment

The statute of limitations on tax assessment pursuant to sections 169 ff AO means that the tax office can no longer assess, amend, or revoke a tax assessment after a certain period. The period begins at the end of the year in which the tax declaration is submitted .

In the case of income tax returns , this is the end of the year in which the tax return was submitted.

The assessment period is four years for income tax in accordance with Section 169 (2) AO; five years for minor tax evasion and even ten years for tax evasion. The existence of tax evasion is determined by the tax office and does not require a criminal conviction.

Within these periods, it is possible for the tax authorities to issue a tax assessment for past periods or to correct incorrect tax assessments if one of the amendment provisions of the AO allows this. Therefore, taxes for more than 10 past years plus interest can be demanded by the tax office.

This usually represents a high financial burden. It is possible that the taxpayer may become insolvent as a result. A discharge of residual debt is excluded if there is a final conviction for tax evasion.

Voluntary disclosure of tax evasion

A criminal conviction can be avoided by making a voluntary disclosure of tax evasion in accordance with Section 370 AO. According to Section 371 AO , the incorrect information must be fully corrected with the tax authorities for all tax crimes of one type of tax. Incomplete information must be completed or the omitted information must be made up.

The information must cover all tax crimes of a type of tax that are not time-barred, but at least all tax crimes of that type within the last ten calendar years, and it must be submitted before the crime was discovered or was about to be discovered.

The prerequisite for exemption from punishment is still the timely payment of the evaded taxes and interest. Therefore, the mere submission of a voluntary disclosure therefore does not prevent a conviction.

Advantages of voluntary disclosure

A voluntary disclosure gives offenders who are financially able to pay the evaded taxes the opportunity to avoid a criminal conviction. If the means are not available, it is important to consider how to achieve tax compliance .

Summary of tax evasion in Germany

Tax evasion in Germany is problematic not only from a criminal law perspective but also from a financial one. The statute of limitations for criminal prosecution does not protect against tax claims for the past.

Seek advice if you may not have fully complied with your declaration obligations and/or have already received letters from the tax office or expect to receive such letters.

Legal assistance for tax evasion in Germany

As a law firm specializing in business law, we are legally secure and competent in all areas of German tax law . Thanks to our many years of practical experience and ongoing professional development, we can optimally represent your interests before the tax authorities and the tax court. Contact us without obligation.

Dr. Patrizia Antoni is a specialist lawyer for tax law in Germany and a specialist lawyer for employment law in Germany . She will be happy to advise you on all tax and employment law issues. Make an appointment at the offices of AHS Rechtsanwälte in Cologne or Bonn.

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