07. Dec 16

Tax oases have run their course – Submit voluntary declaration for tax evasion on time

Tax oases have had their day. Anyone who still has untaxed income in foreign accounts ought to give thought in due course to submitting a voluntary declaration.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: Switzerland, Liechtenstein, Austria as well as other countries were popular among tax evaders for a long period of time. Depositing illicit funds into accounts in these tax havens without the knowledge of the German tax authorities was more or less risk free. Those days are now gone. The former tax havens have since undergone a change of direction. Their banking secrecy is practically history and the fight against tax evasion has been expedited. Additionally, more than 100 countries are already intent on participating in the automatic exchange of fiscal data that is set to begin in 2017.

This will make life increasingly difficult for tax dodgers who still have untaxed income from capital in foreign accounts. Consequently, the risk of the tax authorities detecting tax evasion has once again gone up significantly. It remains possible to go unpunished with the help of a voluntary declaration. However, this is only the case if the voluntary declaration is submitted on time, i.e. before the offence is discovered by the authorities, and is both complete and error free.

For a layperson, it is almost impossible to obtain an overview of the strict requirements set by the legislature in relation to voluntary disclosure and even more difficult to fulfil them. That is why a voluntary declaration ought not to be prepared on one’s own or with the aid of standard templates. The risk of mistakes being made in the process and thus the voluntary declaration failing is high. Were this to happen, a conviction for tax evasion becomes a real prospect despite voluntary disclosure, the consequences of which include heavy fines and custodial sentences.

To prevent this from happening, lawyers and tax advisors who are experienced in the field of tax law should be involved at an early stage. They can closely examine the specific circumstances of each individual case and know which documents and information need to be included in the voluntary declaration for it to be capable of leading to immunity.

If a voluntary declaration is successful, then there is no risk of further sanctions if the amount of evaded taxes does not exceed 25,000 euros. In cases involving larger amounts, the tax authorities impose progressive penal surcharges.

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