- Tax evasion: Only an error-free voluntary declaration affords protection against conviction
- April 16, 2015 | Author: Michael Rainer
- Law Firm: GRP Rainer LLP - Munich Office
- Voluntary disclosure can pave the way back to legality in cases of tax evasion. However, this will only succeed if the voluntary declaration really is error-free.
GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London – www.grprainer.com/en conclude: In cases of tax evasion, tax evaders and the state can profit in equal measure from voluntary disclosure leading to immunity; tax evaders may be spared a conviction for tax evasion, whereas the state has considerable revenue poured into its coffers.
The latter is probably also a reason why there will continue to be the possibility of voluntary disclosure, albeit under substantially stricter conditions from 2015. Yet even today, voluntary disclosure does not represent an automatic clean bill of health. It can only be effective if the voluntary declaration is submitted on time and is complete and error-free. If these conditions are not met, the result may be a conviction for tax evasion despite voluntary disclosure vis-à-vis the tax authorities.
That is why a voluntary declaration ought not to be prepared alone or with the help of standard templates. The risk then of errors creeping in and thus of the voluntary declaration failing is high. It is safer to consult lawyers and tax advisors who are experienced in the field of tax law. They know what information has to be included in the voluntary declaration and which documents need to be presented to the tax office. That being said, a voluntary declaration will only lead to complete immunity if the amount of evaded taxes does not exceed 50,000 euros. This threshold is set to be reduced to 25,000 euros as of 2015. In cases involving larger amounts, a penalty will be charged. Moreover, the tax liability plus interest and, as the case may be, a penalty have to be paid within a particularly short period of time. It is only if payment occurs that a conviction will be abandoned.
It is therefore also advisable, where possible, to submit the voluntary declaration this year, since penalties are expected to drastically increase from January 1, 2015. Depending on the extent to which taxes have been evaded, penalties of between ten and twenty per cent shall fall due.