• Tax Evasion: Federal Government Passes Stricter Rules for Voluntary Disclosure
  • December 8, 2014 | Author: Michael Rainer
  • Law Firm: GRP Rainer LLP - Munich Office
  • On September 24, the federal government adopted a tightening of the rules for voluntary disclosure in the event of tax evasion. Amounts shall only remain unpunished up to 25,000 EUR.

    GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: The rules for voluntary disclosure leading to immunity in the event of tax evasion are to be significantly tightened. That was the decision of the Federal Cabinet on September 24. Thus, from 2015, it will once again become substantially more difficult as well as expensive for tax evaders to wipe the slate clean with a voluntary declaration and return to a state of legal tax affairs.

    The law provides that tax evasion can only then remain unpunished if the amount of evaded taxes does not exceed 25,000 EUR. To date, this threshold has been set at 50,000 EUR. In cases involving higher amounts, penalty surcharges, staggered according to the extent of the evaded taxes, will become due. Thus, for evaded taxes up to 100,000 EUR, a penalty surcharge of ten percent will fall due; for amounts higher than 100,000 EUR, the penalty surcharge is 15 percent and, for one million euros and above, 20 percent. In addition to the evaded taxes, the evaded interest must also be paid immediately.

    Furthermore, the adjustment period is doubled from five to ten years. Businesses, on the other hand, can breathe a sigh of relief: in future, bookkeeping errors are not to be punished as tax evasion, according to an online report from Die Zeit. The federal and state finance ministers had already agreed to the tightening up of voluntary disclosure in May of this year.

    More and more repentant tax evaders are currently turning to voluntary disclosure. The number of voluntary declarations also increased this year. However, voluntary disclosure can only be effective if the declaration is submitted on time and is complete. If these criteria are not met, the voluntary declaration could even backfire. For this reason, it should not be prepared alone or with the help of standard forms. It is always safer to consult lawyers and tax advisors who are experts in the field of tax law, can assess each case individually and are able to prepare the voluntary declaration in such a way that it is effective.

    In view of the stricter rules from 2015, remorseful tax evaders should take action this year if possible.