Munich, 1 March 2010 – New data CDs with the names of alleged tax evaders keep coming up. As a result the number of voluntary declarations doubled from 2,000 to almost 4,000 in the last week of February alone according to an announcement of World Tax Service WTS. In the meantime WTS tax lawyer Dr. Tom Offerhaus strongly advises to pursue the strategy of an orderly withdrawal. It is important not to make any mistakes before a voluntary declaration is filed. The Federal Ministry of Finance has just launched an online poll on the issue of impunity.

As many as 1,300 voluntary declarations were received by the tax offices in Baden-Wuerttemberg in February alone, in Bavaria it was more than 1,200. In Hesse more than 500 repentant tax evaders reported to the fiscal authorities, in Lower Saxony it was 430, in Hamburg almost 200 and in Schleswig-Holstein 175.

Tom Offerhaus is lawyer and partner at WTS in Munich. His recommendation to unnerved tax-payers with un-disclosed bank accounts in Switzerland but also in other countries such as Liechtenstein, Austria or Luxemburg is to remain exempt from punishment for tax evasion. “This, in turn, is only possible as long as the tax investigators have not yet knocked on the tax evaders’ doors. The offender must not be aware of criminal or penalty proceedings having been initiated. If the actual offense has already been discovered and the offender should know of that, he can no longer remain unpunished.“ He strongly advises to have the schedule of income anonymised while a Swiss tax consulting firm is processing the case.

As WTS has established an international network of tax experts in 92 countries, it can guarantee that the preparation of a voluntary declaration will remain fully anonymised until it is filed. “In such a case our Swiss subsidiary will collect the schedules of income from the respective banks and ensure that all documents are fully anonymised when they are passed on to us.” The tax consultants and tax lawyers in Germany will then prepare the supplementary tax return without assigning any name to avoid the imminent risk of discovery before the voluntary declaration is filed.

Without a voluntary declaration the convicted tax evader usually has to reckon with a prison sentence without probation if the amount of tax evaded exceeds one million Euros. This was decided by the Federal Court of Justice as early as in December 2008. In particularly serious cases tax evaders can be sentenced to up to ten years‘ imprisonment. At any rate the offender will have to pay a significant fine in addition to the tax arrears. The Federal Court of Justice made it clear in its decision that tax evasion is anything but a trivial offense.

But what to do against the background of the current discussions if you are concerned about not having declared investment income in Switzerland? “In such a case we can only advise you strongly to file the voluntary declaration as soon as possible,” says Dr. Offerhaus. “Tax evasion is the only criminal offense that can virtually be made undone this way. If it is a matter of urgency, the voluntary declaration should be based on a generous estimate. A detailed supplementary tax return, which will hopefully come to a more favourable outcome, can be filed later. Should the tax evasion be a particularly serious case, the voluntary declaration should comprise the past ten years. Otherwise at least the past five years should be included since the penal statutory period of limitation for less severe cases of tax evasion is five years.

In order to be granted impunity, a voluntary declaration of the non-declared income of the past five years plus the payment of the tax arrears for this period of time might suffice. But there is no getting around paying tax arrears for the five-year-period prior to that. In addition to the tax arrears, interest has to be paid to the amount of six per cent of the tax due per year. “Quite a few tax payers will be surprised at how low the tax due is compared with the value of their assets,” reassures the tax lawyer.

Speed is everything when it comes to a voluntary declaration. According to Dr. Offerhaus an offence is not considered discovered just because the name of a tax payer is found on a data CD the tax investigators got their hands on. An offense is only given once the data has been compared with the personal tax returns of the tax payer. „Moreover, the person in question does not have to expect at that stage that his offense will be discovered. Since this would require that he already knows that his name is included on the CD.“

The Federal Ministry of Finance has just launched an online poll on impunity in which the citizens can express their opinion. “Do you think it is fair that a tax evader can count on being exempt from punishment if a voluntary declaration is filed?,” the Federal Minister of Finance asks the visitors of the website www.bundesfinanzministerium.de.

Note to the editorial departments: We will be happy to arrange for an interview with Dr. Tom Offerhaus at short notice.

Pictures and Press Materials

 New data CDs with the names of alleged tax evaders keep coming up.

Press release as pdf