• Tax evasion: Small Mistakes in Voluntary Declaration can have Serious Repercussions
  • December 19, 2014 | Author: Michael Rainer
  • Law Firm: GRP Rainer LLP - Frankfurt am Main Office
  • Voluntary declarations leading to immunity serve as an incentive to return to a state of legal tax affairs, yet they will only succeed if they are error-free.

    GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: A voluntary declaration leading to immunity is essentially an offer from the legislature to tax evaders to find a way back to legality. In the face of a continuous stream of new revelations and the increased willingness of former tax havens to cooperate, this represents quite an enticing offer as the risk of tax evasion being discovered continues to rise. Yet the path via a voluntary declaration to return to a state of legal tax affairs is not as simple as people commonly assume, because only a voluntary declaration that is timely and complete will lead to immunity. Even small mistakes can result in the voluntary declaration fizzling out and the threat of drastic punishments right through to custodial sentences.

    In order to circumvent this risk, voluntary declarations should not be prepared alone or with the help of standard sample declarations. It is scarcely possible for laymen to grasp the complexity of voluntary declarations and small mistakes can have big consequences. It is safer to turn to lawyers and tax advisors who are experienced in the field of tax law. They can assess each case individually and know which information is necessary for the voluntary declaration to be complete and capable of leading to immunity. However, complete immunity only remains a possibility if the sum of evaded taxes does not exceed 50,000 EUR. In cases involving larger amounts, a penalty surcharge must also be paid.

    These penalty surcharges are expected to rise significantly from 2015, as the tougher regulations for voluntary declarations are likely to enter into force then. Only amounts up to 25,000 EUR will remain unpunished thereafter. A penalty surcharge shall be imposed for all amounts beyond this. Moreover, it will be considerably more difficult to ensure the completeness of a voluntary declaration. While the relevant tax data had to be disclosed up till now for the past five years, this period of time is increasing to ten years. This may render completing voluntary declarations substantially more difficult, since the banks concerned do not always have all of the documents on hand. It is therefore easier and cheaper to submit a voluntary declaration this year.