18. Apr 17

Tax dodgers under pressure – Way out of tax evasion is through voluntary disclosure

While the number of voluntary declarations for tax evasion is easing off, the same cannot be said of the efforts being put into the fight against tax evasion. It remains possible for tax evaders to submit a voluntary declaration leading to immunity.

Since the rules for voluntary disclosure in relation to tax evasion were tightened in 2016, there has been a clear drop in the number of tax dodgers reporting themselves. Notwithstanding this, the fight against tax evasion continues unabated. Tax evaders are still being convicted with the help of purchased data CDs as well as other storage media, thereby providing federal and state authorities with significant additional income. It would therefore be very wrong for tax evaders to think themselves safe. The data is carefully evaluated by tax investigators. Moreover, the automatic exchange of financial information involving numerous former tax havens began this year. The chances of tax evasion being detected by the authorities has once again gone up as a result of this.

Provided they submit a voluntary declaration on time, it is still possible for tax evaders to avoid criminal prosecution and the threat of a conviction. Having said that, the voluntary declaration needs to have been submitted before the authorities discover the tax evasion. In addition, the voluntary declaration needs to be both complete and error free for it to be effective. To this end, all of the information from the past ten years that is relevant from a tax perspective, among other things, has to be disclosed to the competent tax office.

Without expert assistance, it is almost impossible for a layperson to satisfy the strict requirements set by the legislature. Anybody who nonetheless attempts to prepare a voluntary declaration on their own or with the help of standard templates is taking a substantial risk, it generally not being possible to outline the complex processes in this way and even small errors potentially resulting in the voluntary declaration failing. Should it come to this, there is still the risk of a conviction for tax evasion despite the voluntary declaration.

Those who do not wish to take this risk can turn to lawyers and tax advisors who are versed in the field of tax law. They can accurately assess and give an account of the complex issues and in doing so prepare a custom voluntary declaration which is tailored to the case in question. In the event of a voluntary declaration succeeding, there is no longer any reason to fear further sanctions.

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