20. Apr 15

Tax evasion: Longer limitation periods for illicit earnings outside of EU – Voluntary disclosure

The planned law to tighten the rules for voluntary disclosure in cases of tax evasion is expected to be adopted before Christmas. Voluntary disclosure will then be more expensive and difficult from 2015.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: The key points of the bill stipulate that voluntary disclosure can only lead to complete immunity if the amount of evaded taxes does not exceed 25,000 euros. In cases involving larger amounts, penalties fall due that, depending on the extent to which taxes have been evaded, can amount to up to 20 per cent. Furthermore, the adjustment period will be extended from five to ten years.

On November 7, the Frankfurter Allgemeine Zeitung covered a further aspect of the planned tightening of the rules on its website that had hitherto been less well known. According to this, the limitation period concerning criminal liability for illicit earnings concealed from the German tax authorities in foreign accounts outside of the EU is set to be extended. In these cases, the limitation period is not to commence until the tax authorities have become aware of the case. An upper limit is to be set to ten years. This shall only affect illicit earnings that are in accounts outside of the EU or in states which have not signed up to the automatic exchange of information.

While voluntary disclosure is expected to be more difficult and expensive from 2015, it still represents a way of protecting oneself against a conviction for tax evasion. However, it will only succeed if the voluntary declaration is submitted on time, complete and error-free. Since it is hardly possible for laymen to understand the complexity of a voluntary declaration, it should not be prepared alone or with the help of standard forms. Small mistakes are easily made and may be sufficient to result in the ineffectiveness of the voluntary declaration. There is then the threat of a conviction for tax evasion despite voluntary disclosure. The result can be high fines or custodial sentences.

It is safer to entrust the voluntary declaration to lawyers and tax advisors who are experienced in the field of tax law. They know what information it has to contain and can also be of assistance in procuring the necessary documents.

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

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