Criminal tax law

The allegation of tax evasion burdens the person concerned in several ways: Under tax law he is still obliged to cooperate with the tax authorities, but under criminal tax law he does not have to incriminate himself, i.e. he does not have to disclose any information that is disadvantageous to him. The defense of criminal tax allegations therefore requires special knowledge of both tax law and criminal law. In addition, tax evasion has increasingly come into the focus of politics in recent years and the highest court case law has formed an opinion on the level of the penalties in this area, which the criminal justice system must take into account: The result of criminal tax proceedings has long since ceased to be clarified with the tax authorities alone, but often in the context of criminal tax proceedings, which is why “in court” experience is absolutely essential.

We at H2W Criminal Law specializes in tax and criminal tax law and has decades of experience in defense in criminal proceedings. We offer coordinated advice and representation in criminal tax proceedings as well as in taxation proceedings – and to avoid criminal tax proceedings. We work in close coordination with (your) tax advisors and tax experts on the respective – including international – tax law issues in order to achieve the best possible results.

Preliminary consultation: New regulations in tax law to combat the effects of the coronavirus pandemic

In order to mitigate the economic consequences of the COVID-19 pandemic, the federal government has initiated extensive aid measures, including instructions to the tax offices through circulars from the Federal Ministry of Finance to grant deferrals – including for VAT tax – and requests to adjust the advance payment of corporate income and income tax. Deadlines for submitting tax returns and advance notifications are not inhibited.
Enforcement measures regarding tax arrears should currently not take place.
We advise you preventively in order to avoid the risk of criminal liability in connection with such applications, because the connection between justified deferral and corona-related loss of income will be reliably checked – sooner or later.

Initiation of criminal tax proceedings

Coming under the focus of tax investigations is a risk that affects everyone: It applies to both private individuals and those responsible for companies. Even the question of whether you are obliged to submit tax returns is not easy to answer for those affected.
There are several ways for financial investigators to become aware of suspicious facts, irregularities or possible violations:

  • Companies and businesses are subject to complex tax cooperation and documentation obligations: for example, when preparing annual financial statements, business analysis (BWA), cash management or in connection with input tax deduction.
  • Companies are audited at regular intervals; an external audit (tax audit) as well as a special VAT tax audit or audits on special tax-relevant issues or individual tax types, e.g. income tax audits, are possible. In addition, there are tax audits by the social insurance institutions.
  • Individual trades can of course also be checked, as can a GbR.
  • Tax audits for private individuals are for example likely if increased income is declared, for example investment income or inheritance, fluctuations in income compared to the previous year or information from the personal environment often also give reason to examine tax returns more closely.
  • The indication can also come from a third place: Control reports from other tax offices, reports from other authorities (social security agencies or prostitution controls the regulatory office, or “leaks” such as the purchase of tax CDs can lead to a review.

Inadequate bookkeeping, suspicious invoices or other inconsistencies generally justify the assumption of suspicion of tax evasion: The tax investigation authorities are informed. Searches of private and business premises – often depending on the alleged tax damage – probably as well asset seizure measures (arrest, attachments and seizures). A comprehensive examination of the economic situation takes place; a lavish lifestyle is for example illuminated by means of monetary invoices. Seizure of assets is possible even if the means for acquiring it are unclear, even without proof of a specific criminal offense.

Criminal proceedings and taxation proceedings

Proceedings on charges of tax evasion demand different things from the person concerned because of the parallelism of tax and criminal proceedings:

The taxation procedure aims at fair taxation, it is about the enforcement of taxes to be paid from the point of view of the tax authorities. As a taxpayer, the person concerned is obliged to cooperate and disclose documents or to specifically name business partners. A contentious taxation process can last for many years and is characterized by notices, objection procedures at the tax offices and legal proceedings before the tax courts.
At the same time, the person concerned is the accused in criminal tax proceedings. He does not have to self-incriminate, he faces punishment and he faces the seizure of property.

There is a natural tension between the two processes as they influence each other and require a careful and well thought-out approach. The interaction also makes it possible, for example, to first clarify one of the procedures and put the other to rest.
With knowledge and experience in both areas of law, we provide you with the best advice to shoulder this double burden.

Voluntary disclosure exempting punishment

Voluntary disclosure is a unique way of averting a penalty in criminal law. The tax regulation grants this possibility if the taxpayer “reverses” the tax evasion by submitting a declaration of correction for the last 10 years, paying the evaded taxes with interest and late payment surcharges and there is no blocking reason. Adhering to these prerequisites requires extensive specialist knowledge, even the clarification of the post-declaration period or the intent level is complex, and they involve a high risk for the taxpayer: He opts for a comprehensive disclosure of the facts and thus exposes himself to sustained criminal prosecution in the event that he fails to meet the complex requirements of an effective self-disclosure.

The self-disclosure exempt from punishment is still possible in the case of previously concealed investment income (foreign assets). It is becoming more and more relevant for companies, for example in connection with VAT tax or wage tax (benefits in kind).

In addition to the voluntary self-disclosure that is exempt from punishment, declarations of correction according to Section 153 AO, actual agreements with the tax office and other procedures offer the possibility of avoiding a conviction for tax evasion or the possible consequences associated with the suspension of proceedings such as the loss of the license to practice medicine, hunting license, etc.

At H2W Criminal Law, we help you with our specialized knowledge and our decades of experience.

We know which strategy to choose for you.