• Criminal Tax Law: High Penalties for Tax Evasion
  • December 18, 2014 | Author: Michael Rainer
  • Law Firm: GRP Rainer LLP - Cologne Office
  • German tax law is complex and constantly changing. It is therefore easy to unwittingly render oneself guilty of tax evasion. The consequences can be drastic penalties.

    GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: Tax evasion is a serious criminal offence and has long since stopped being viewed as a trivial crime. Accordingly, rigorous efforts are made in taking action against tax evaders and searching for fiscal offences. Here, it is possible for the accused tax evaders to be completely unaware of their misconduct and to breach certain provisions of the frequently changing German Fiscal Code (Abgabenordnung (AO)) merely out of ignorance. Ignorance does not, however, afford protection from punishment even in these cases. In instances of tax evasion, one should anticipate high fines through to custodial sentences.

    In order to avoid being suspected of tax evasion in the first place, it is advisable from the outset - especially for businessmen, to seek legal advice and representation from lawyers and tax advisors who are experienced in the field of tax, as there are various ways in which tax investigations can be made aware of infringements relating to tax law. This can occur, inter alia, in the course of external audits, through control notices from banks or even by purchasing so-called tax CDs.

    If an investigation is commenced, the accused should expect to be faced with comprehensive inspections and possibly searches as well. In these cases, one should immediately seek out legal support. Thus, a lawyer should definitely be present, for instance, during searches of private or business premises to make sure that the accused’s rights are not infringed and also to represent the interests of the suspect at a later stage in proceedings. A voluntary declaration leading to immunity can potentially represent a way out.

    There is a threat of high fines and possibly even custodial sentences in cases of tax evasion. In serious cases, a sentence of up to ten years in prison can be delivered. The German Federal Court of Justice starts from the assumption that a case is particularly serious if the amount of evaded taxes is 100,000 euros or more. Having said that, there is the possibility of obtaining suspended custodial sentences. Tax evasion can also result in fines of up to 50,000 euros.

    The most reliable way of avoiding being suspected of tax evasion in the first place is to involve experienced lawyers and tax advisors in every planned activity and have them examined for their relevance from the perspective of tax law.