Tax evasion: Voluntary declaration requires professional assistance

The legislature has deliberately maintained the option for tax dodgers to return to a state of tax compliance by means of voluntary disclosure leading to immunity. Professional assistance is vital in this context.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: With the emergence of CDs containing information on tax evaders, the Panama Papers and the automatic exchange of financial information from 2017, it is becoming more and more difficult for tax dodgers to conceal untaxed income from the tax authorities. If tax evasion is discovered, those concerned could be faced with high fines or even custodial sentences.

That being said, the legislature has deliberately ensured that tax evaders have a way out in the form of voluntary disclosure leading to immunity. With the help of a voluntary declaration, it is possible to avoid criminal prosecution and a potential conviction. However, this path is not without its pitfalls. A voluntary declaration must meet all of the requirements set out by the legislature in order to ultimately lead to immunity. Among the most important points are the requirements that the voluntary declaration be submitted on time, i.e. before the tax evasion is detected by the authorities, complete and error free.

For a layperson, it is almost impossible to satisfy these requirements without professional assistance. Those who nonetheless attempt to do so on their own or with the help of standard templates are taking a big risk, as complex events and processes can scarcely be accounted for in this way and mistakes are practically inevitable. The end result is that the voluntary declaration will fail and the prospect of a conviction for tax evasion still looms large.

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 necessary to be able to carefully assess the facts and circumstances of each individual case and make a detailed account of the relevant information. In this way, one can ensure that a voluntary declaration fulfils the legal requirements and is actually capable of leading to immunity.

If a voluntary declaration is successful and the amount of evaded taxes does not exceed 25,000 euros, the tax evader will not face further sanctions. In cases involving larger amounts, the tax authorities shall impose a tiered penalty surcharge. This surcharge must be paid in addition to the tax debts plus interest in order to bring the matter to a conclusion.

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