date | theme

9. June 2022 | What side effects can a criminal tax case have and how do you defend yourself against it?

31. March 2023 | Effective self-disclosure: These points must be included

27. April 2023 | Cessation of criminal tax proceedings: These possibilities exist

1. May 2023 | Information refusal rights in criminal tax proceedings

22. August 2023 | Prominent tax evasion: the top 11 in Germany (this post)

When it comes to prominent tax evasion in Germany, these top eleven cases are always at the forefront: Theo Sommer, Klaus Zumwinkel, Boris Becker, Steffi and Peter Graf, Paul Schockemöhle, Uli Hoeneß, Alfons Schuhbeck, Eduard Zwick, Andreas Schmid together with Andreas Grosch, the Flick affair and the Cum-Ex scandal. Many of them are very individual issues. For others, there are at least partial similarities. In particular, there seems to have been some similarities in the motivation for tax evasion.

Tax evasion is more widespread in Germany than you might think. Tax evasion takes place in all possible orders of magnitude. From very small cases, where kiosk owners embezzle sales tax, to billions, which have proven influence on the financial strength of Germany. But unlike what it may have been decades ago, when tax evasion was still considered a trivial offense because it allowed the state to be dealt with in this way, the awareness of the consequences that tax evasion has for the general public is much more pronounced today.

Nevertheless, tax evasion still confronts us in media reports. Therefore, we now go back in time to look at eleven prominent cases of tax evasion in Germany. Perhaps we find some surprising commonalities and encounter celebrities as well as cases that hardly anyone knows nowadays or those that should shock us all.

In order to show the most famous cases of tax evasion in the recent history of the Federal Republic of Germany, one could set different structures. On the one hand, one could characterize the cases according to the amount of taxes evaded. Or you order them according to the penalty to which the courts sentenced the tax evaders. On the other hand, one could also classify by the activity by which the evaded taxes were gained. There would also be scope for this, because some revenues seem to be more vulnerable to tax evasion than others. However, the simplest and least judgmental approach we now take is the historical one.

One of the biggest tax evasion cases in Germany is related to the Flick affair of about 50 years ago. Here, the Flick Group tried via numerous dubious party donations to all parties represented in the then Bundestag (CDU/CSU, SPD, FDP) as well as to selected party members to make a billion profit from share transactions via § 6b EStG tax-free by politics, which ultimately happened. However, when the party donations flew up, the suspicion of corruption quickly arose.

The Flick Group, however, committed tax evasion in advance. By transferring donations to the charitable company Soverdia of the Catholic religious community of the Steyler missionaries, black coffers were created. Because part of these payments secretly and in cash returned Soverdia to the donor, the Flick Group. From these black coffers they paid the party donations.

By the way, other actors in this affair also carried out tax evasion, namely the politicians who left these grants untaxed. These included former Federal Ministers for Economic Affairs Hans Friedrichs and Otto Graf Lambsdorff. Also, the Flick affair at that time was a prominent tax evasion that aroused the public. But the presumption of political bribery was the main focus. However, unlike tax evasion, direct proof of this could not be provided securely.

As a doctor, Eduard Zwick has earned a lot of money with the Johannesbad thermal spa in Bad Füssing (Lower Bavaria) which he founded. He was also called the Bath King. But he did not pay taxes, as befits a king, for years. In the end, the tax liability amounted to about DM 41 million and a further DM 30 million late payment surcharges and other tax benefits. Eduard Zwick did not want to pay taxes. Why should he? After all, with Franz Josef Strauß and Gerold Tandler, he had two very influential friends in Bavarian politics. In the end, however, he fled with all his untaxed money, before the tax office could collect the tax debt, to Switzerland. There he died in 1998, without ever having been prosecuted for his tax evasion.

Steffi Graf earned a lot of money with tennis – and evaded it. However, she was able to prove to the court that her father, Peter Graf, together with his financial advisor, was solely responsible for tax evasion. This involved a total of DM 12.3 million, which remained untaxed between 1989 and 1993. The court found him guilty in 1997 and sentenced him to three years and nine months without parole.

The piquantity of the story is that Peter Graf only committed tax evasion because he wanted to save on the costs of sound tax advice. Although he initially relied on the advice of a renowned tax consultancy firm, he left the implementation of these extremely complex international tax arrangements, including with letterbox companies in the Netherlands and the Netherlands Antilles, to a simple tax assistant.

Another German tennis legend, Boris Becker, committed tax evasion in both the international and national media. He evaded taxes because he concealed a residence in Germany from the tax office. Because in addition to his officially registered domicile in the tax haven Monaco, the top athlete also had a key to an apartment in Munich. However, this circumstance justified his unlimited tax liability in Germany, so that he would have had to tax his income here.

Between 1991 and 1993 he withheld DM 1.7 million in taxes from the German Treasury. His conviction in 2002 resulted in a suspended sentence of two years in prison and a fine of EUR 500,000. According to today’s legal standards, Boris Becker would not have received a suspended sentence but a corresponding prison sentence. But what he was spared in prison experiences here, he later caught up abroad by other crimes.

Another athlete who committed tax evasion is jumper legend Paul Schockemöhle. He even evaded DM 22.6 million in taxes. He is said to have used a foundation in Liechtenstein to conceal taxable income in Germany. When the German financial administration acquired tax CDs abroad in 1997, which contained financial data of potential tax evaders, Paul Schockemöhle reported himself. The legal consequence two years later was a penal order for a suspended sentence of eleven months.

Probably the largest case of tax evasion in the history of the Federal Republic of Germany is also relatively new. At the same time, it dwarfs all other tax evasion cases described here in terms of the damage caused. This is because the Cum-Cum and Cum-Ex scandal is tax fraud in the billions by multiple perpetrators: the investigations and legal proceedings, some of which are still ongoing, target more than 1,000 people; For this purpose, an own courthouse is even built.

More specifically, the cum-cum and cum-ex frauds are the unlawful refund of taxes that have never been paid, or taxes that have only been paid once but have been refunded several times. The architect of this tax fraud is a former official of the financial administration: Hanno Berger. He alone is said to have evaded between 2006 and 2008 EUR 113 million in taxes. The sentence of the court is correspondingly high: eight years in prison for Hanno Berger in two trials each. Further judgments will certainly follow soon, because even the BGH has now confirmed the incompatibility of such practices with the law. Nevertheless, Hanno Berger has requested revision.

Although this is a significant prominent tax evasion in Germany, it differs from the other cases in that it is the entirety of all comparable cases instead of an individual case. So here are many actors who have committed this kind of tax evasion, but hardly anyone is known as a celebrity. An exception to this is probably Carsten Maschmeyer, who claims to have been involved in ignorance.

Another case in which a former athlete was noticed by tax evasion is the former national player and president of the football club FC Bayern Munich, Uli Hoeneß. However, in his case, the EUR 18.5 million in taxes confessed by him came from speculative transactions with foreign currency, which he processed through a bank in Switzerland. In fact, it was probably at least EUR 28.5 million, so that Uli Hoeneß was finally sentenced to three and a half years in prison, without parole.

Klaus Zumwinkel was CEO of Deutsche Post. Between 2001 and 2007 he funneled EUR 1 million to a foundation in Liechtenstein without paying taxes on it. The critical point here was that he had maintained control of the foundation, so the financial administration personally assigned the profits to him. For this he was sentenced after his confession to a suspended sentence of two years and a fine of EUR 1 million.

The next tax evasion case comes from the film industry. Andreas Schmid and his partner Andreas Grosch allegedly evaded EUR 250 million in taxes via at least one media fund (VIP Medienfonds), which was supposed to support the financing of films, although a large part of this benefited fund investors. The core of the accusation was that the funds had recorded unlawful depreciation and losses, so that fictitious transactions should have been in the foreground. Although this question was initially not fully clarified in court, Andreas Schmid still had a prison sentence of six years in the first and second instance. Andreas Grosch was sentenced to a suspended sentence of two years.

In 2020, however, a further judgment in this connection was issued before the Munich Tax Court, which invalidates the accusation of tax evasion. Because here the judges ruled that the tax design model is legal. Thus, this judgment confirms that there are no fictitious transactions.

Theo Sommer, former editor of the weekly newspaper “Zeit”, evaded taxes of EUR 649,000 between 2007 and 2011. The money comes from freelance secondary work. In 2014, he was sentenced to a suspended sentence of one year and seven months. The fine was EUR 20,000.

A recent spectacular tax evasion case is that of celebrity chef Alfons Schuhbeck. He has evaded sales tax of EUR 2.2 million by cash manipulation. In addition, the Treasury also escaped income tax. The court sentenced him to three years and two months in prison. In early 2023, however, Alfons Schuhbeck submitted a revision. The revision revealed that the verdict was largely error-free, so that Alfons Schuhbeck will soon come to the same prison where his friend Uli Hoeneß had already sat.

Technical advice for

Tax evasion and self-disclosure?

An observation that can be made from the list of the 11 most important tax evasion cases is that athletes seem to be prone to tax evasion. In this case, Uli Hoeneß and Paul Schockemöhle could also be counted, even if their tax evasion took place only after the end of their sports careers. But to conclude from these celebrities on the generality of all athletes is probably very simplistic. After all, there are significantly more entrepreneurs than athletes who generate profits from their activities and commit tax evasion. And these are proportionally much less common as an example of prominent tax evasion in the public interest. In the 11 prominent tax evasion cases presented here, some entrepreneurs are also represented. In addition, the athletes mentioned here have all fulfilled very different offences for which they had to answer in court. So you have to differentiate here as well.

Without further developing the idea, we should also point out that many of the cases presented were basically avoidable. Because with a proper tax structure you could have kept one or the other profit without tax evasion – and quite legally.

This is exactly what tax advice is for: you explore how to pay the lowest possible taxes according to the rules of the law. Or, to put it another way, you research how much taxes the state actually deserves. But since tax laws are usually very complex (especially in Germany), the choice between tax advice and tax evasion should actually be very easy to decide.