• Tax Evasion: EU Agrees Comprehensive Exchange of Information
  • March 17, 2015 | Author: Michael Rainer
  • Law Firms: GRP Rainer LLP - Düsseldorf Office ; GRP Rainer LLP - Stuttgart Office
  • Things are becoming increasingly more difficult for tax evaders within the EU. The EU finance ministers have now agreed to a comprehensive exchange of information among the national tax authorities.


    GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: The fight against tax evasion within the European Union will intensify further. As reported by “Handelsblatt” online on October 14, the EU finance ministers have agreed to automatically and comprehensively exchange information concerning the earnings of EU citizens. This exchange of information is set to commence in 2017.


    This resolution will make it more and more difficult to conceal illicit earnings in foreign accounts within the EU from the exchequer. Having said that, a few exceptions apply. For instance, Austria shall not be participating in the system until 2018. Notwithstanding this, the risk of tax evaders being discovered continues to increase. Voluntary disclosure leading to immunity can still offer a way out.


    Provided that the authorities have not begun any investigations, tax evaders can return to a state of tax compliance by means of a complete voluntary declaration. The voluntary declaration can lead to complete immunity for sums of evaded taxes up to an amount of 50,000 euros. In cases involving higher amounts, one should anticipate a penalty surcharge. If the tax liability and, where applicable, the penalty surcharge are settled within a short timeframe then the matter is no longer an issue.


    However, this will only be the case if the voluntary declaration fulfils the necessary requirements and, most importantly, is complete. To this end, all tax-relevant information from the past five years has to be disclosed to the tax authorities. Even minor errors can result in voluntary disclosure being ineffective and the threat of a conviction for tax evasion. In order to avoid this risk, a voluntary declaration ought not to be prepared alone or with standard templates. It is safer to turn to lawyers and tax advisers who are competent in the field of tax law. They can judge each case individually and ensure that the voluntary declaration is complete.


    Since the rules for voluntary disclosure are set to be substantially tightened from 2015, among other things the penalty surcharges will increase, tax evaders should submit a voluntary declaration this year if possible.