31. Mar 16

Untaxed income from capital in foreign accounts – Voluntary disclosure

Be it Liechtenstein, Austria or Switzerland, many tax havens have had their day. Anyone who still has untaxed income in foreign accounts ought to consider voluntary disclosure.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: It used to be no trouble getting to Switzerland, Austria or Liechtenstein, but the journey to these former tax havens has since become a dead end. The countries are no longer playing ball. Anyone who still has untaxed income from capital deposited in foreign accounts risks this tax evasion being detected by the authorities. The end result may be a conviction for tax evasion.

Banking secrecy has since become a thing of the past in many countries and former tax havens. Financial institutions are cooperating with the German exchequer and customers are being asked to clean up their accounts and submit a voluntary declaration which can lead to immunity. With more than 70 countries wanting to participate in the automatic exchange of bank data from 2017, the risk of tax evaders being discovered shall continue to increase. By then it will scarcely be possible to conceal illicit funds from German tax investigators. The only way to avoid criminal prosecution and a possible conviction for tax evasion is to submit a voluntary declaration which can lead to immunity.

However, time is beginning to run out for voluntary disclosure, as only a voluntary declaration that is submitted on time, i.e. before the authorities have discovered the tax evasion, can lead to immunity. Furthermore, the voluntary declaration also needs to be complete and error-free for it to be effective. It’s no use taking a piecemeal approach to disclosing all of one’s tax offences to the tax authorities. If the stringent requirements associated with voluntary disclosure are to be met, one ought not to prepare the voluntary declaration alone or with the aid of standard templates. There is no such thing as a ready-made voluntary declaration; it has to give a detailed account of all of the circumstances specific to each individual case for it to be able to lead to immunity.

For this to happen, lawyers and tax advisors who are versed in the field of tax law should be given responsibility for voluntary disclosure from the outset. They know which documents and information need to be included in the voluntary declaration.

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