Many entrepreneurs and private individuals have already evaded taxes. This can happen both consciously and unknowingly. A timely self-report can prevent criminal proceedings. This means in time that the tax office remained unknown until the time of self-disclosure the tax evaded. In addition, you should be completely honest and state all taxes that you have evaded. Because if the tax administration later finds a missing tax, then this means that all previously concealed taxes were evaded. Therefore, it makes sense to consult an experienced tax consultant for a self-disclosure. For example, it can protect sensitive data from access by the authorities. He also knows how to avoid tax evasion that has been forgotten over time leading to tax evasion by the tax administration. Because then the punishment-free self-declaration would lapse.

1.Tax evasion – a widespread phenomenon

Whether entrepreneur or private person, many German citizens have already evaded taxes. It is difficult to estimate the relationship between deliberate tax evasion and the unknowingly committed reckless tax reduction. This can range from incorrect information about business dinners with spouses or gifts to business partners as bribes, to black money for craft work, to the embezzlement of sales tax on the sale of drugs.

Curious as these examples may sound in part, they are nevertheless commonplace and widespread. For this reason alone, one should refrain from drawing comparisons to tax honesty in other countries and cultural circles. Because it is often overlooked that this is also connected with historical reasons. If, for example, tax evasion served as a kind of resistance to an occupation power over long periods of time, then this is perhaps morally less reprehensible than one might think as an outsider. However, this is not intended to serve as a plea for a culture of tax evasion, but rather to justify a critical introduction to our contribution.

2. tax evasion and reckless tax reduction

After all, tax honesty is in our own interest – both for us as a general public and for us as a tax office. Because apart from the moral point of view that tax evasion is tantamount to theft of land and society, one risks the consequences of a crime. After all, tax evasion is anything but a trivial offence. It is much more a crime enshrined in the tax code. As a result, as a famous former football player and sausage manufacturer in Bavaria had to learn very unpleasantly from personal experience in the past, it can even end with prison and heavy fines.

But when exactly is tax evasion? This is true, on the one hand, when the intention is to unlawfully withhold taxes by preventing effective taxation. The circumstance should also be interpreted as intent if someone merely risks tax evasion instead of actively planning it. Then the approving acceptance legal is called a contingent intent. In general, tax evasion can occur by withholding, falsifying or incorrectly providing information relevant to taxation to the tax authorities. Also the refusal to submit a tax return, to which one is obliged by law, is thus part of tax evasion. This includes the timely prior notification of taxes such as sales tax or payroll tax.

If, however, such an act or omission lacks intent, one speaks instead of a frivolous tax reduction. In most cases, this is due to an error by the taxpayer. Therefore, if a reckless tax reduction occurs on the basis of an incorrect assumption, this constitutes at most a tax offence instead of a tax offence. Therefore, a frivolous tax reduction does not impose a penalty, but a fine, which can amount to up to EUR 50,000 .

If a taxpayer who has committed tax evasion in the past wishes to reverse this, he can refund a self-disclosure pursuant to § 371 AO. This pre-empts the detection of a crime committed by the authorities. Consequently, he prevents his tax crime from being prosecuted. However, a self-disclosure must also comply with strict formal rules. For example, for each type of tax where there is tax evasion, a separate self-disclosure must be made.

In addition, there are some criteria that exclude impunity despite self-reporting. On the one hand, the tax authority must not be aware of the facts of tax evasion until the time of the self-disclosure. The announcement of an examination is also a reason for exclusion for an exemption from punishment. Of course, this is especially true if an unannounced tax audit surprises the tax evader. Moreover, the crime must not be known in any other way. If, for example, sensitive data about foreign bank accounts become known through a data leak (keyword tax CD) or if they are seized during a routine inspection by authorities (for example at customs or a traffic control), then it is also too late for a penalty-free self-disclosure.

3.2. Other Implications of Self-Disclosure

Furthermore, it should be remembered that while self-declaration means impunity with regard to tax evasion, it does not include other crimes related to evasion, such as document forgery or bribery. For certain categories of people, self-disclosure can also have serious, albeit indirect, consequences. If, for example, a police officer or a judge dares to take the step of self-report, this can mean the end of his employment. Because such officials are obliged to integrity in all criminal aspects. Thus, the tax evasion of an official constitutes an offence of service.

If other persons were also involved in the tax evasion, as instigators, accomplices, indirect perpetrators or helpers, and thus also became criminals, then the immunity for self-report is still only valid for the person who makes the self-report. However, a joint self-disclosure is also possible if one of the parties concerned also submits the self-disclosure on behalf of the other parties involved.

Tax evasion and self-reporting – what we can do for you

If a taxpayer now wants to voluntarily disclose his tax evasion by self-disclosure, he should rely on the expertise of an experienced tax consultant. For example, it can ensure that sensitive data, which can serve as a basis for law enforcement, is protected from access by the authorities. This also includes the transport of the data. Because tax consultants and auditors also enjoy the protection of §§ 53 and 97 StPO. As a result, tax consultants can also refuse to testify about the alleged tax evasion of their client. In addition, the data entrusted to them by the client are also protected against seizure and thus from inspection by the authorities.

If a taxpayer wishes to refund self-declaration because of the tax evasion he has committed, then he must file it according to formal rules. On behalf of our clients, we pay attention to all formal requirements for the reimbursement of the self-disclosure. In particular, we clarify with the taxpayer whether further taxes have also been evaded. Because only a comprehensive clarification of past tax evasions can bring about the punishment exemption.

Unlike tax evasion, a self-disclosure is also possible during a tax audit by the tax office. Here, too, we support our clients with advice and deeds. Because a tax reduction is only an administrative offence instead of a crime, the tax office can act at its own discretion. In the case of tax evasion, however, prosecution is required by law.

Furthermore, a tax consultant can prevent self-disclosure in certain cases. Instead, we declare on behalf of the client of the tax authority that a subsequent correction of the relevant tax returns according to § 153 AO takes place. Although this may only seem like a cosmetic aspect, many clients are happy that this avoids self-disclosure.

It often happens that a client in such a situation lacks the security to have actually mentioned all relevant facts in connection with his tax evasions. Finally, it may be that, for example, he has regularly declared smaller amounts as operating expenses instead of private expenses. In such a case, we proceed in such a way that we initially indicate a higher amount than the taxable amount to the tax office.

The corresponding tax assessment of the tax office can then be proven by us with objection in order to then indicate the correct amount determined in the meantime. Even if another fact appears, which the tax office considers to be tax evasion, one can then argue that this is covered by the overestimated original scope of the correction. In this way, we prophylactically prevent you from losing the penalty exemption on your self-report because of a forgotten but subsequently revealed tax evasion. After all, it is more than sobering when a tax evader returns to the path of virtue, but is then prosecuted for the entire amount of tax he has evaded because of a simple, unconscious negligence.

5th level of fines after self-disclosure

Although the self-declaration of a tax evader leads to a cessation of prosecution, you still have to expect fines. The amount of the penalty is differentiated according to the amount of the tax evaded. After all, there is no penalty for tax evasion of amounts up to EUR 25,000. In addition, up to a tax evasion of EUR 100,000, 10% of the amount evaded is paid as a penalty. From a tax evasion of more than EUR 100,000 you have to expect a penalty payment of 15%. However, if tax evasion exceeds EUR 1,000,000, even 20% is to be paid as a penalty.

In addition to the penalty, the tax evader also has to pay interest on the tax owed by him. An interest rate of 6% is currently required by law. However, this percentage may be too high to be in line with the Basic Law. Because a market-standard loan nowadays has a significantly lower interest rate.

To complete the present article, we also briefly discuss the limitation of tax evasion. According to the law, the period within which tax evasion can be prosecuted ends after ten years. However, a few other points should also be considered. Because the period begins only with the time when the period for the assessment of the regular tax ends. If the tax evasion took place before the expiry of the time limitation period for tax evasion, this time shall be decisive for the limitation period for tax evasion.