27. Oct 15

Tax evasion: Illicit earnings in foreign accounts – Solution is voluntary disclosure

Voluntary declarations with respect to tax evasion have not come to an end this year, which indicates that untaxed income in foreign bank accounts is becoming a burden on those concerned.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: Around 10,500 voluntary declarations concerning tax evasion have been received by the competent tax offices in the first half of 2015. If this trend continues, the final figure at the end of the year could be as high as 20,000 voluntary declarations. Experts had not anticipated a number of this magnitude following the tightening of the rules on voluntary disclosure at the beginning of the year.

It is now assumed that large sums of untaxed income from capital are still deposited in foreign bank accounts. In view of the growing risk of detection, these illicit earnings are increasingly becoming burdens on those concerned. Significant penalties may be imposed if the tax evasion is discovered. Voluntary disclosure continues to represent a solution.

However, a voluntary declaration can only be effective if it is submitted on time and the tax evasion has not already been detected by the authorities. Moreover, it must also be complete and error-free. Even small mistakes can render the voluntary declaration invalid. For this reason, laymen should not prepare voluntary declarations on their own or with the help of standard templates, since errors are then practically inevitable given the many factors and details which need to be taken into account for voluntary disclosure. This cannot be done by a layman, even if he makes use of standard templates. That is why lawyers and tax advisors who are experienced in the field of tax law ought to be entrusted with voluntary disclosure. They are able to treat and appraise each case individually to ensure that the end result is a complete and error-free voluntary declaration.

If the amount of taxes avoided does not exceed 25,000 euros, the tax liabilities must subsequently be paid plus interest. There is no need to be concerned about additional sanctions. In cases involving larger amounts of avoided taxes, the tax authorities will impose penal surcharges amounting to ten to twenty per cent of the sum of evaded taxes. These penal surcharges need to be paid together with the tax liabilities plus interest. It is only once the money has been credited to the account of the relevant authority that further criminal proceedings have been averted.

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

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