Uli Hoeneß is particularly familiar to us as president of the football club 1. FC Bayern Munich. Some people may also remember that he was once a very successful football professional. So he won with the 1st FC Bayern Munich all important titles. He also achieved success as a striker in Germany’s national football team. But what we most closely associate with the name Uli Hoeneß today is his tax evasion. He is said to have conducted currency speculation via bank accounts in Switzerland and withheld the profits from the German Treasury. In 2014, the Munich Regional Court sentenced him to three and a half years of imprisonment without probation for tax evasion of EUR 27.200,000. So Uli Hoeneß had to go to prison for his tax evasion.

1st Uli Hoeneß Tax Evasion – Introduction

Prominent tax evaders are now known a lot in Germany. Amazingly often German top athletes seem to be affected by this. So we know examples such as Steffi Graf, Boris Becker or Paul Schockemöhle. But even in football, we professional athletes are known for their tax offenses, albeit rather from abroad. One example of this is Lionel Messi and his father, who as his manager was also targeted by the tax investigation in Spain.

But here we want to talk about a former German football star and his tax evasion, namely Uli Hoeneß. In the case of Uli Hoeneß, tax evasion occurred at a time when the athlete had already ended his active career on the football field for a long time. However, he was active in the management of the football club 1. FC Bayern Munich when he committed tax evasion. And since he was (and still is) very famous in his role as a manager, in this article we want to look at how he had evaded taxes, how he flew up and what punishment he received for it.

2 Who was Uli Hoeneß before his tax evasion?

But before we look at how Uli Hoeneß is connected with his tax evasion, we pay tribute to his achievements as an athlete and as a manager.

2.1 Uli Hoeneß, the football professional

Uli Hoeneß played for 1st FC Bayern Munich in his youth. This was in the 1970s. There he regularly occupied the position of striker and was a feared goal scorer. His skill thus contributed to the fact that his club could win several titles. But anyone who can play football so successfully is also interesting for the national football team. There, too, Uli Hoeneß achieved success, such as the European Football Championship in England in 1972 and the World Cup in Germany in 1974.

2.2 Uli Hoeneß – Manager and Association President

After an injury to the knee, his performance as a professional footballer remained below the previous level. That is why Uli Hoeneß ended his active football career in 1979 at the age of 27. However, Uli Hoeneß remained faithful to football and especially his club. So he entered the management of the club after his exit from active sport. He had thus become the youngest manager of a German first division team.

In the management of the 1st FC Bayern Munich Uli Hoeneß started for further high-altitude flights. In particular, he plays a key role in FC Bayern Munich’s economic success and financial dominance in the German Bundesliga. Therefore, it was no surprise when he was elected president of the club in 2009 and moved to the supervisory board of FC Bayern Munich Aktiengesellschaft. This was probably the deserved highlight of his career in the service of the association.

2.3 Uli Hoeneß – sausage manufacturer

What probably few know about Uli Hoeneß is that he also worked as an entrepreneur. Together with Werner Weiss, he founded HoWe Wurstwaren KG in Nuremberg in 1988. In addition, his wife Susanne was for a long time a general partner of the limited partnership. In the meantime, his son Florian has taken over his father’s shares in HoWe Wurstwaren KG as a limited partner. His daughter, on the other hand, took over from her mother the position as a general partner of the KG.

Uli Hoeneß Tax Evasion: Black money in Swiss bank account

3.1. Where did Uli Hoeneß get the fortune for his business?

Now that we have come to know Uli Hoeneß as an ambitious person who also acts with financial skill, let us return to the question of how he evaded taxes. As far as we know, he initially speculated with his own means. By 2000, he had lost most of the money. But then he received a loan of DM 5 million from former Adidas boss Robert Louis-Dreyfus. At the same time, his friend Louis-Dreyfus helped him with a guarantee for another loan of DM 15 million. After some time, Uli Hoeneß repaid his liabilities.

First of all, this is all legal. However, this was probably already done with the intention of concealing profits that this wealth should generate from the German Treasury. Because at that time the Swiss banking secrecy was still valid. Foreign tax authorities and other circles with a legitimate interest had no opportunity to get an idea about this wealth and its gains.

3.2 High stakes foreign exchange speculation

In fact, Uli Hoeneß used this fortune to generate more. He used it for currency speculation. He was even quite successful, because over a period of about a decade he earned many more millions in this way. In 2003 and 2005 alone, the profit should have amounted to just under EUR 52 million and more than EUR 78 million respectively. Although Uli Hoeneß also had losses, so that in the end only a small part of the profit was retained, this is irrelevant for the evaded tax. Because these profits were hidden in an account in Switzerland and Uli Hoeneß had never reported them to the tax office in Germany, he committed tax evasion.

Uli Hoeneß with his speculative transactions partly proceeded so hectic that he apparently lost the overview of the profits and losses himself. Uli Hoeneß is said to have lost EUR 18 million in a single day. On the other hand, it is said that at times there were even more than EUR 150 million in his account. These are sums that he himself later described as crazy. It was probably a kind of gambling addiction that had affected him according to his own information. In any case, he is said to have made an estimated 50,000 transactions during this time.

4. How the tax evasion of Uli Hoeneß flew up

4.1. The star is researching for a Swiss number account

It will be interesting now when we tell the story of the discovery of the tax evasion of the Uli Hoeneß. Curiously, the media were the first to learn of the existence of the Swiss bank account. On January 16, 2013, the star reported that a top official of the German Bundesliga could be assigned a numbered account of a bank in Switzerland. At the request of the magazine about the account on 15.01.2013 Vontobel had been silent, referring to the banking secrecy. First of all, it remained anonymous who was allegedly associated with tax evasion. The star only knew what the account number was.

4.2. reaction to media research: Uli Hoeneß wants to submit self-disclosure

Nevertheless, this research was a trigger for hectic reactions. Vontobel informed her client UIi Hoeneß about the visit of the journalists. Uli Hoeneß, his tax consultant, a lawyer for commercial law and a retired tax officer from Munich, who was still working part-time for the financial administration, had documents compiled by the bank (the pensioner in part-time was later prosecuted for his participation). With this one wanted to submit a self-disclosure, even before the tax office of the matter came on the track. This was also done on 17 January 2013 in a hurry.

4.3. Investigation of the Public Prosecutor's Office

Shortly afterwards, the public prosecutor’s office in Munich took over the investigation. This led to an early morning raid on Uli Hoeneß on 20.03.2013. For him, however, the tax investigators also bring an arrest warrant. Uli Hoeneß remains free on bail. About a month later, the first media reports appear in which Uli Hoeneß is associated with tax evasion.

July 2013, the Munich II Public Prosecutor’s Office brings a lawsuit against Uli Hoeneß in seven cases. Further cases are not considered due to the then limitation period of five years. In November 2013, the court allows the action, so that it comes to the trial on 10.03.2014.

4.4. What else happened before the trial

Shortly before, in January 2014, something else is happening. The media had received internal documents from the tax office in the previous year, which related to Uli Hoeneß tax return. Now there was an internal raid in the financial administration with the aim of finding the information leak. Finally, Uli Hoeneß filed a criminal complaint in May 2013 for violation of tax secrecy. But the search was unsuccessful. After all, about 1,100 financial management employees had access to this leaked data. So it could have been any of those people.

Uli Hoeneß also paid his tax liabilities before the trial began. In this way he tried to obtain a more gracious judgment. His lawyer, Hanns W. Feigen, who had also assisted Klaus Zumwinkel in his tax evasion to a suspended sentence, must have advised him.

5. The tax evasion of Uli Hoeneß in court

5.1. The hearing in the case of tax evasion of Uli Hoeneß

The court heard the Uli Hoeneß case in four days. Already on the first day of the trial there was a surprise. The public prosecutor had accused the Bavarian manager of having evaded EUR 3.5 million in taxes. Uli Hoeneß and his defenders admitted, however, that the amount of tax evasion amounted to EUR 18.5 million. Also publicly known are the large sums with which Uli Hoeneß juggled in his speculative transactions, but without having any knowledge of the matter. But on the second day of the negotiations, there were further surprises. A witness of the prosecution, who worked as a tax officer on the case, had calculated that the tax liability of Mr. Hoeneß must have amounted to at least EUR 27.2 million.

But it was also questionable whether the self-disclosure was effective. The prosecution saw significant deficiencies in content. Finally, a self-declaration must contain all the elements of a tax return, especially about the amount of income. The disclosure of a self-declaration must therefore be so comprehensive that no further investigation by the financial authorities is necessary. However, this was apparently the case. The defense argued, however, that only minor errors had crept into the documents for self-disclosure. Finally, in the self-declaration, the amount owed for tax purposes was generally mentioned.

5.2. The Pleas of Prosecution and Defense

Correspondingly, the pleas of the prosecution and the defense were then also contrary. The prosecution considered it proven that Uli Hoeneß had committed tax evasion, even calling it a serious tax offense. Therefore, she demanded a prison sentence of five and a half years.

In addition, she pointed out that the defense had only just before the trial a number of important documents transmitted. This led to the discrepancy between the EUR 3.5 million secured in the indictment and the amount of tax evasion actually relevant to the trial. The defense, on the other hand, referred to the confession, the willingness to cooperate, the lack of criminal records and the high media pressure to which Uli Hoeneß was exposed. It requested that the procedure be terminated because it considered that the self-declaration had been effective. But even if the court should draw other conclusions on this, at best a suspended sentence would be considered.

5.3. The judgment of the Munich Regional Court

On the fourth and last day of the trial, the verdict on Uli Hoeneß and his tax evasion fell: imprisonment for three years and six months without parole. This was significantly less than the demand of the public prosecutor's office, but also significantly more than the acquittal that Uli Hoeneß had wanted. This was also due to the fact that the judge contradicted the effectiveness of the self-disclosure.

Now many observers of the trial expected Uli Hoeneß to appeal. In fact, this was also the first reaction of the defense. But shortly thereafter Uli Hoeneß surprisingly renounced it. He said he accepted the verdict because he wanted to take responsibility for his mistake. Since the public prosecutor's office was also reasonably satisfied with the verdict, Uli Hoeneß, who was convicted of tax evasion and finally convicted, began his prison sentence at the beginning of June 2014. Because of good leadership, he was soon able to reach the open prison and after about a year and a half also an early dismissal.

Lessons from the tax evasion of Uli Hoeneß

Uli Hoeneß publicly regretted his tax evasion. One may well ask how this change of heart came about. Finally, it was clear that his self-declaration was linked to the discovery of his Vontobel account. But one may and should also ask what was the reason for his tax evasion at all. Only when you understand this can you get a realistic picture of the circumstances that had moved him to do so.

6.1. Possible reasons for the tax evasion of the Uli Hoeneß

We speculate: for a person like Uli Hoeneß, who on the one hand is famous for her many successes and who also likes to celebrate, it was perhaps taboo to admit that one could have gambled once. This is especially true with regard to its finances. Only with the borrowed assets, which he had received through his friend Louis-Dreyfus, and the financial success with the foreign exchange transactions, the attitude of Uli Hoeneß could have changed.

What he himself had brought near a gambling addiction in an interview could have obstructed his view of other constraints, namely filing a proper tax return. After all, he needed the money that he would have had to pay as taxes in order to continue to speculate on a large scale; The game had to go on. Your own pressure for success – or rather the addiction to the feeling of being successful on a large scale – had then probably become overwhelming. But when in the end the fortune had shrunk again, it was again too late for an insight. Now it was said to sit the thing out until statute of limitations occurs. But it was different.

6.2. Self-disclosure must be comprehensive in order to be effective

The other perspective we take here on the tax evasion of Uli Hoeneß illuminates the effectiveness of his self-disclosure. At the trial, his legal counsel pointed out that up to this point no court had yet to rule on a faulty self-report. Nevertheless, the judge’s view on this was clear. Although Uli Hoeneß had submitted the self-declaration in time, i.e. before the tax investigation became active, it was probably materially imperfect. This may have been due to the haste with which Uli Hoeneß organized the self-disclosure in a night and fog action. Normally, in such a complex case, a bank needs several days to compile all the documents. This time was apparently missing Uli Hoeneß.

That is why we recommend consulting tax consultants early on and using their support. As tax consultants, we also know some possibilities to prevent the tax administration from handing over the case to the tax investigation. In any case, a hauruck action such as Uli Hoeneß does not guarantee an effective self-disclosure.