Voluntary disclosure in case of tax evasion

Voluntary disclosure is an option for clients to whom the exemptions do not apply, for example, they have not been notified of the initiation of criminal proceedings. If none of the exemptions applies, it is possible to file a voluntary disclosure with the competent authority.

Why should I file a voluntary disclosure in case of tax evasion?

Voluntary disclosure in case of tax evasion serves a single purpose: to obtain immunity from prosecution. Contrary to all other offenses under German criminal law, a voluntary disclosure in case of tax evasion can ensure that no penalty is set. However, this requires that a “clean sweep” be made and that all taxes and interests owed be paid.

How does the voluntary disclosure mechanism work?

A voluntary disclosure is a formal declaration of previously untaxed income. By doing so, it must be noted that unreported income must be retroactively declared covering a period of 10 years. If the actual income is not known, it is possible to file the voluntary disclosure on the basis of an estimated amount. However, there must be sufficient funds to pay the taxes and interests owed in a timely manner. Otherwise, the voluntary disclosure will become ineffective and you will not be guaranteed immunity from prosecution.

What is the penal surcharge if I file a voluntary disclosure?

The penal surcharge always applies in cases of voluntary disclosures where taxes in excess of 50,000 euros per offense were evaded. In this case, the law stipulates that exemption from punishment can no longer be claimed, however, prosecution can be averted by filing a valid voluntary disclosure and paying the penal surcharge. The penal surcharge is 10% if the amount evaded does not exceed 100,000 euros, 15% if the amount evaded does not exceed 1,000,000 euros, and 20% if the amount evaded exceeds 1 million euros.

Is it possible for companies to file a voluntary disclosure?

Companies can also file a voluntary disclosure in case of tax evasion. A voluntary disclosure is particularly suitable for companies, since taxes cannot only be evaded for the benefit of oneself, but also for the benefit of third parties, e.g. the limited liability company (GmbH). Since companies quickly pile up large tax arrears, those responsible generally have an interest in making a “clean sweep”. In that case, it is often underestimated that the acts of employees can, in the context of organizational negligence, also be attributed to the company management. In addition to that, it is important to deal with the issue of the personal tax liability of the managers, which must be avoided.

I am the right advisor to contact if you consider filing a voluntary disclosure

Since 2010, I have been advising both private individuals as well as companies nationwide on issues involving voluntary disclosures in case of tax or customs evasion. Use the opportunity to take advantage of a 30-minute free phone consultation with me and introduce your case to me. I will deal with your call confidentially and even if you decide not to book a follow-up consultation, the conversation is subject to the attorney-client privilege.