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2 December 2020 | Tax evasion and self-disclosure – easily explained and solved

4. June 2021 | Investigative proceedings: When does criminal tax proceedings begin?

11. November 2021 | Search and tax investigation – Your rights: Avoid mistakes!

18. November 2021 | Tax evasion and fraud cannot exist at the same time! Delineation and consequences

27. January 2022 | Proof exploitation ban – What is this and what is there to consider? (this post)

In criminal tax law, clarification of the facts is inadmissible at all costs. This means that there is a ban on the use of evidence in certain investigations. As a result, the evidence may not be used in the context of the criminal tax proceedings. We declare certain prohibitions on the use of evidence

We have already published several articles on the subject of criminal tax law:

The factual clarification serves the equal taxation. Nevertheless, it may happen that evidence is subject to a prohibition on the use of evidence and therefore cannot be used in the context of criminal tax proceedings. This can also be described with an information blockade.

A prohibition on the use of evidence occurs in particular if the collection of evidence violates fundamental rights of the taxpayer or rights derived from fundamental rights. For example, human dignity under Art. 1 I GG or participation refusal rights under § 101 AO may be violated. However, this does not include the unannounced appearance in the context of a search. A breach therefore does not lead to a blanket prohibition of use of evidence and in any case to a prohibition of use of evidence. It is necessary to weigh the public interest of statutory and equal taxation on the one hand and the nature and intensity of the breach of the provisions of evidence on the other. Since the legality and equality of taxation are regarded as a fundamental principle of taxation, a prohibition on the use of evidence is only recognised in exceptions according to the case-law.

1.2.1. Formal rules for the use of evidence

Jurisdiction therefore distinguishes between formal and material prohibitions on the use of evidence. Formal prohibitions on the use of evidence are those against mere formal and procedural provisions. In these cases, there is no prohibition on the use of evidence if the financial authorities could have obtained the information legally.

1.2.2. Material rules for the use of evidence

On the other hand, there are also substantive legal prohibitions on the use of evidence. These also do not always justify a prohibition on the use of evidence. Rather, the interests must be analysed and weighed against the purpose of the respective provision. In the context of this balancing exercise, it is necessary to determine whether the interests protected by the infringed provision are to be assessed at a higher level than the interest of disclosure. For example, the protected interest is higher if the investigative measure violates the core area of the constitutionally protected fundamental rights of the taxpayer. The consequence of the violation of substantive prohibitions on the use of evidence is that what has been determined is always unusable. Nor can it be cured by reinvestigative measures.

Violations of the core area of fundamental rights always lead to a prohibition on the use of evidence. From the requirement of human dignity, for example, it follows that the prohibition of the proof method of § 136a StPO is also illegal in tax law. This includes significant violations, such as abuse, deception, threats or hypnosis. The standard applies to the taxable person but also to other persons who participated in the taking of evidence. It would be conceivable that the taxpayer was deceived about the start of the criminal tax investigation procedure.

Violations of the intimate sphere are also subject to a substantive prohibition on the use of evidence. These include, in particular, the use of lie detectors, the fundamental prohibition of secret recordings of sound or the violation of letter secrecy. Also included are violations of the rights of refusal of information by the financial authorities if these are outflows of fundamental rights. This includes the right of refusal of information of relatives according to § 101 AO, since this serves the protection of marriage and family (Art 6 I GG). The right of refusal of information of the press and broadcasting according to § 102 paragraph 2 no. 4 AO serves to protect the freedom of expression according to Art. 5 paragraph 1 GG. Consequently, infringements also lead to a prohibition on the use of evidence.

In the context of evidence gathering that does not exceed the threshold of violation of a fundamental right, a weighing always takes place. It is therefore necessary to determine whether the protected legal interests are to be higher in individual cases. In this case, there is a prohibition on the use of evidence. According to case law, violations of the obligation to provide information pursuant to § 393 (1) sentence 4 should not be subject to a prohibition on the use of evidence. The non-acceptance of a prohibition on the use of evidence in the event of breach of the duty of a third party to inform about his right to refuse access is also highly critical.

A prohibition on the use of evidence also includes violations of the prohibition on the use of evidence under international law. It is therefore not possible to carry out fact-finding measures in a foreign territory. This prohibition on the use of evidence also applies in particular if the tax authorities of foreigners obtain information about taxpayers within the framework of another territory by means of cash payment. This also includes the purchase of the so-called tax CDs. Nevertheless, this example does not constitute a fundamentally illegal clarification method. Even searches based on tax CDs with illegally procured data waste are therefore not subject to a prohibition on the use of evidence.

It happens that facts and evidence have been obtained on the basis of an independently contestable investigative measure, i.e. an administrative act. Then the taxpayer has to challenge the illegal investigative measure in order to then invoke a prohibition on the use of evidence. In principle, an administrative act has the effect of offences and legalisation. Therefore, that effect may be withdrawn only if it is firmly established that the administrative act in which it was withdrawn, revoked, otherwise cancelled or terminated is unlawful.

The remote effect of prohibitions on the use of evidence is also problematic. It is discussed whether evidence obtained indirectly on the basis of the unlawful investigative measure and lawful evidence obtained in isolation are unusable. It is presumed that this can only apply if the investigative measure constitutes a qualified violation of fundamental rights or a criminal act. Otherwise, the lawfully obtained information, which has been discovered, for example, in the course of an unlawful search, can be further exploited in the course of criminal proceedings. According to the case-law, the entire criminal procedure must not be paralysed by a single error. Therefore, the remote effect of the prohibition on the use of evidence depends on the severity of the error. The limits are therefore determined by the situation and the nature of the infringement. Accordingly, a weighing must always be carried out in individual cases.