In cases where there may be tax evasion, criminal tax proceedings are regularly initiated. According to § 385 (1) AO, the general rules of criminal proceedings, i.e. the Code of Criminal Procedure (StPO) and the Judicial Constitution Act (GVG), apply to criminal tax proceedings. However, the criminal tax procedure receives some modifications through the special provisions of §§ 385 AO. The core of the criminal tax proceedings is the investigation procedure. Upon completion of the investigation procedure, judicial criminal tax proceedings are often initiated. This article deals with the investigation procedure.

Basically, in criminal investigation proceedings, the public prosecutor's office is the so-called master of the investigation proceedings. This means that it is responsible for the investigation procedure. When prosecuting tax crimes, however, the tax authority is regularly the investigating authority. Consequently, it exercises the rights and obligations in the investigation procedure (§§ 386 (1) sentence 1, 399 AO). The tax authority independently and without being bound by instructions to the public prosecutor's office, if the offence constitutes exclusively a tax offence, a church tax or other tax offense or an offense equivalent to the tax offense. However, the public prosecutor's office can take the proceedings at any time (§ 386 (4) sentence 2 AO). Organisationally, within the tax office, the penalties and fines offices perform these tasks. This must be distinguished from the tax investigation department. It is the enforcement body for the penalties and fines agencies. Their officials are so-called investigators of the public prosecutor's office (§ 404 sentence 1 AO).

The principle of legality is considered to be the fundamental principle of criminal tax proceedings. This means that the tax authority is obliged to initiate criminal proceedings if it learns facts that justify the suspicion of a tax offence (§§ 385 (1) AO, 160 (1) StPO).

There must be a so-called initial suspicion. This is available if there are sufficient actual indications for the offence (§ 152 paragraph 2 StPO). The mere presumption of the crime is therefore not enough. The criminal tax proceeding is initiated as soon as the tax authority, the public prosecutor’s office or their investigating officers have taken measures which are clearly aimed at prosecuting someone for a tax offence (§ 397 (1) AO). The initiation of the tax proceedings must be recorded in the file and communicated to the accused (section 397 (2) and (3) AO). If the offence is statute-barred, criminal tax proceedings may no longer be initiated. The statute of limitations begins as soon as the offence is ended (§ 78a StGB) and is in principle five years. Investigative measures against the accused lead to the interruption of the limitation period (§§ 369 paragraph 2 AO, 78c paragraph 1 StGB). Consequently, the statute of limitations begins to run again after each interruption (§ 78c (3) sentence 1 StGB).

The date of initiation of criminal tax proceedings is of particular importance. From then on, the legal status of the taxable person changes. In the ongoing taxation procedure, the taxpayer is obliged to participate. In criminal tax proceedings, on the other hand, he does not need to contribute to his transfer (§ 136 (1) sentence 2 StPO). Therefore, § 393 (1) sentence 2 AO stipulates that participation in the taxation procedure may no longer be enforced. The BGH therefore assumes that a criminally protected tax return obligation is excluded as long as and to the extent that a tax criminal proceedings against the taxpayer is ongoing for the same period. This does not apply to subsequent taxation periods, even if negative conclusions can be drawn for the initiated criminal tax proceedings.

Upon initiation of the tax procedure, the possibility of tax-exempt self-disclosure (§ 371 (2) sentence 1 number 1 letter b) AO also ends. At this time at the latest, the accused shall be informed of his right to refuse to give evidence and that his duties of cooperation cannot be enforced. Without information, a prohibition on the use of evidence arises and qualified information must be provided. This means that the accused should be informed about the right to remain silent and that previous statements are unusable.

For the purpose of determining the facts, the financial authority or the public prosecutor in the tax criminal proceedings carry out investigations of any kind himself or have them carried out by officers of the police service (especially the tax search) (see § 161 StPO). In particular, it may hear the accused and witnesses. Other investigative measures include search, seizure, observation, telecommunications surveillance and provisional arrest. The investigating authority may order these measures only in the event of imminent danger, as they constitute significant interference with fundamental rights. Otherwise, the investigating judge alone is empowered to order the order. For this reason, danger in default must be interpreted only narrowly as a prerequisite. It exists when the judicial order, which is necessary in itself, cannot be obtained without jeopardising the purpose of the measure. The public prosecutor's office or financial authority has therefore only application rights (§ 162 StPO). The aforementioned powers of the investigating authority are far from exhaustive.

The purpose of the search is either to capture the suspect or to obtain evidence. As search objects come apartments and other rooms, as well as persons and objects into consideration. If an unsuspect is searched, the admissibility requirements are higher than in the case of a search of a suspect (§§ 102, 103 StPO). The search warrant shall provide information on the type of tax, the period of time and the act to which the actual suspicion relates, the nature and possible content of the evidence sought and the extent of the premises to be searched. The search warrant may be appealed against.

For procedural purposes, items may be seized which may be relevant as evidence for the investigation so that they are not lost. An informal seizure takes place if the object is detained or voluntarily issued (§ 94 (1) StPO). A formal seizure by seizure is carried out if the object is not voluntarily issued or has been issued (§ 94 (2) StPO). The object is then either placed in official custody or subject to restriction of disposal.

An observation is subject if it is short-term not a judge reservation. For observations that last longer than 24 hours or take place on more than two days, if there is no danger in delay, an order by the investigating judge (§ 163f paragraph 3 StPO) is required. The prerequisite for such an observation is the initial suspicion of a crime of considerable importance (§ 163f (1) Sastz (1) StPO). The observation must also be proportionate. This is the case if the facts in another way significantly less promising or difficult to research.

Telecommunications monitoring is only permitted for certain tax offences (§ 100a paragraph 2 no. 2 StPO). And is considered a ulitma ratio, that is, it should be the last resort. According to § 393 (3) sentence 2 AO, the legally obtained findings can also be used for the taxation procedure but only for the catalogue acts mentioned.

Pre-trial detention is only possible if there is a judicial arrest warrant against the accused. This requires urgent suspicion and a reason for detention. Reasons for detention are flight, risk of flight or darkening (§ 112 paragraph 2 StPO). From the issuance of the arrest warrant, the competence for prosecution passes to the public prosecutor's office (§ 386 paragraph 3 AO).

Even in criminal tax proceedings, the accused has rights that he should also make use of. It is therefore very important to know them. The accused has, among other things, the right to remain inactive. He does not have to appear in a summon for examination by the tax or customs search. The situation is different with the summons in court, from the public prosecutor's office or financial authority. He has to appear here. In addition, the accused has a right to refuse to testify and therefore does not have to incriminate himself. His silence must not lead to adverse consequences in the process.

The accused can defend himself by making objections or requests for evidence. He can also consult a defender or tax consultant (§ 392 AO). In particular in the investigation procedure, the accused can choose a tax consultant as defense counsel (§ 392 (1) half sentence 1 AO).

The accused must be heard at the latest before the end of the investigation in order to respect the right to be heard. This can be waived if the procedure is terminated.

Criminal courts are independent courts. Therefore, they are entitled to decide on preliminary tax questions. It can therefore happen that the taxpayer is convicted of tax evasion in the tax criminal proceedings, but the tax courts do not recognize the tax claim. This problem is prevented by the possibility of suspending the criminal tax proceedings until the final conclusion of the tax proceedings (§ 396 AO). During the suspension, the criminal prosecution statute of limitations rests (§ 396 paragraph 3 AO).

There are several ways in which the investigation can be terminated.

Prerequisite for a penal action or public action is that there is sufficient suspicion of crime. This is the case if, after the entire contents of the file, the conviction of the accused is likely to be expected. If the tax authority has conducted the investigation, it is empowered to terminate the investigation by means of a penal remedy application or to close the criminal tax proceedings. But it cannot make a public complaint. Only the public prosecutor's office is empowered to do so.

Criminal tax proceedings may be brought if, although there is sufficient suspicion, the offence concerns only a minor matter for which only a small tax reduction or only a small tax advantage has occurred, the guilt of the offender is to be regarded as small and there is no public interest in prosecution.

The criminal tax proceedings can be discontinued in accordance with § 153a paragraph 1 StPO after fulfillment of conditions. The prerequisite for this is that the public interest in prosecuting a crime can be eliminated by conditions and instructions. In addition, the guilt must not be opposed. Furthermore, the consent of the accused and the court is necessary.

From the amount of EUR 25,000 reduced tax per offence, the personal reason for exclusion of the self-disclosure is excluded (§ 371 AO). In this case, however, the self-disclosure leads absolutely to refrain from persecution (§ 398a AO). For this purpose, the amount evaded plus evasion interest must be repaid and an additional amount of money must be paid to the State Treasury. The same applies also in particularly serious cases of tax evasion within the meaning of § 370 (3) sentence 2 number 2 to 6 AO.

Agreements are often reached in criminal tax proceedings. The aim here is an overall settlement of the case. This includes, among other things, so-called actual understandings. Here, a sharp distinction must be made between the taxation procedure and the criminal tax procedure. In taxation driving, there is room for legally binding agreements on the basis of the scales of evidence. In criminal tax proceedings, however, the principle in dubio pro reo (“In case of doubt for the accused”) applies. As a result, the understanding may not be considered as a confession of the accused. In addition, the agreement “increased tax assessment against cessation of criminal proceedings/mild punishment by penal order” is prohibited.