Tougher approach against tax evasion – Submit voluntary declaration on time

Germany’s federal and regional state governments want to step up their measures once again in the fight against tax evasion and hang out tax havens to dry. Voluntary disclosure leading to immunity represents a way out for tax evaders.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: Greater transparency, more rights to information for the tax authorities and tougher sanctions are supposed to make life more difficult for tax dodgers. Germany’s federal and regional state governments wish to continue to expedite the fight against tax evasion, tax havens and dubious dealings through shell companies. The Federal Finance Minister, Wolfgang Schäuble, has already reacted to the release of the Panama Papers with a catalogue of measures dealing with these issues. These measures are also set to be discussed at the annual conference of the state finance ministers.

The end result is expected to involve the tightening of laws to these ends in order to accelerate the fight against tax evasion. Things are becoming increasingly difficult for tax evaders, particularly in view of the fact that many countries are also cooperating on an international level to uncover tax evasion. Thus, the automatic exchange of financial information will begin next year and include various tax havens. Tax dodgers with untaxed income from capital will then be faced with a greater risk of detection than ever before. At the moment, they are still able to prevent this from happening and avoid a possible conviction for tax evasion by submitting a voluntary declaration leading to immunity.

That being said, a voluntary declaration can only be submitted if the offence has not yet been discovered by the authorities. Moreover, it needs to be complete and error free if it is to be capable of leading to immunity. It must, for instance, disclose all of the information that is relevant from a tax perspective from the past ten years vis-à-vis the tax office. For a layperson, these kinds of strict requirements are almost impossible to satisfy without the support of experts.

Those who nonetheless attempt to prepare a voluntary declaration on their own or with the help of standard templates are taking a big risk, as it is generally not possible for the complex events and processes in question to be accounted for in this way and mistakes in the declaration are almost inevitable. The consequence is that voluntary declaration will fail and can then only have a mitigating effect.

To prevent this from happening, lawyers and tax advisors who are competent in the field of tax law ought to be consulted from the outset. They have the experience required to be able to carefully assess the circumstances of each individual case as well as produce a detailed account of all of the relevant data so that the voluntary declaration is ultimately effective.

http://www.grprainer.com/en/legal-advice/tax-law/voluntary-disclosure.html