What are the consequences of tax evasion

What are the consequences of tax evasion and how can you protect yourself from it?

12.12.2020 | Category: Tax & Financial Criminal Law

Anyone who evades taxes intentionally provides incorrect or missing information in order to gain a tax advantage. This behavior is prosecuted with all severity and can lead to high fines or even imprisonment.

Tax evasion in criminal tax law


‌ Tax evasion is the central offense in criminal tax law. The Tax Code (AO) describes tax evasion in Section 370. Accordingly, who commits tax evasion deliberately causes a tax reduction through incorrect or incomplete information or achieves an unjustified tax advantage. Who:

‌1. Passes on incorrect or incomplete information to tax authorities or other authorities,

‌2. withholding significant tax facts from the tax authorities or

‌3. no mandatory tax characters or tax stamps used.

‌The act can through both active doing as well as through breach of duty are committed.

also the Attempt is punishable. Only a natural person can be considered a perpetrator, for example not a GmbH, but its managing director, tax advisor, etc.

‌Examples of tax evasion are:
‌‌
  • Incorrect profit determination - Settlement of private taxi rides and hotel stays as a business trip
  • Sham deals - Paying out the household money as wages to the partner
  • Refrain - Earning a living by selling on Internet exchanges without reporting this to the tax office

  • There are different types of tax evasion:
  • Income tax evasion
  • VAT evasion
  • Inheritance tax evasion
  • Gift tax evasion
  • Corporate tax evasion
  • Business tax evasion
  • Wage tax evasion

  • What are the penalties for tax evasion?


    ‌This can lead to tax evasion Fines or imprisonment up to five years come. In severe cases, the prison sentence increases to up to ten years, a fine is then no longer possible. In addition to the fine, the evaded taxes plus 6% interest must be repaid annually. No table of penalties can be drawn up for tax evasion, as the individual case is always possible Mitigating and Reasons for aggravating the penalty is judged.

    ‌Particularly serious cases exist when trading within a gang, multiple receipts are falsified or an official abuses his position. A particularly large amount of tax evasion, from an amount of 50,000 euros, is a particularly serious case. As is the tax reduction via third-country companies, i.e. a partnership, corporation, estate whose headquarters are outside the EU or European free trade area.

    as mitigating punishment various factors can have an effect:
  • Personal factors such as illness, age, level of education, tax inexperience
  • Acting for a company, not out of self-interest
  • Correct tax behavior until the act
  • Active participation in clarifying the facts
  • Immediate back payment of evaded taxes
  • Ending tax evasion from your own business
  • Tax evasion over a short period of time
  • Fulfill current tax obligations

  • ‌Furthermore, some factors can also have an aggravating effect:
  • Acting exclusively out of self-interest
  • Prior tax knowledge of the offender
  • Entangling other people in the fraud
  • Passing away systematically and over a long period
  • Criminal record of the perpetrator
  • Obstructing the investigation, for example by destroying evidence

  • Voluntary disclosure in the event of tax evasion


    Before tax evasion is discovered by the authorities, there is the possibility of Self-disclosure exempt from punishment. This prevents proceedings and thus fines or imprisonment, only the evaded taxes including arrears and evasion interest in the amount of 6% have to be repaid annually. Once the crime has been discovered, there is no longer any possibility of self-disclosure. Anyone who decides to self-report should contact an experienced lawyer, such as one Tax law attorney. This helps with the complex matter because the process offers a multitude of sources of error.

    ‌The self-disclosure takes place at the responsible tax office. All figures have to be corrected, then the missing taxes plus interest will be paid, there may be a surcharge.

    Statute of limitations on tax evasion


    ‌ Tax evasion will criminal as well as tax law tracked. This results in two periods of limitation for prosecution. The prosecution of tax offenses is statute-barred after five years and in serious cases after ten. The period begins with the termination of the act, i.e. with the announcement of the tax assessment. The tax assessment period is at least ten years.

    Legal help


    ‌If you have tax proceedings, you should consult a tax lawyer. During the proceedings, the latter will try to weaken the facts and the amount of the tax embezzled. In addition, the lawyer can incorporate all mitigating factors into the defense strategy.

    Tax evasion - the law explained in simple terms

    What is tax evasion?

    Tax evasion is the most important offense in criminal tax law. Anyone who commits tax evasion deliberately provides incorrect or incomplete information in the tax return in order to gain a tax advantage for themselves. The act of tax evasion can be committed either through active action or through deliberate omission.

    Continue reading:What is tax evasion?

    When is tax evasion a criminal offense?

    Anyone who deliberately, that is, intentionally and knowingly, evades taxes is a criminal offense. Even the attempt to evade taxes can be punished with a fine or imprisonment.

    Continue reading:When is tax evasion a criminal offense?

    What do I need to do to get mitigation?

    There are various factors that can mitigate the penalty. Personal factors such as illness, age or tax inexperience can weaken a penalty. If you act for a company and not out of self-interest, this can also have a positive effect. Anyone who has behaved correctly from a tax point of view up to the point of the offense, actively contributes to the investigation, pays missing taxes immediately or ends tax evasion by themselves, shows behavior that mitigates the penalty. Tax evasion over a short period of time and the fulfillment of current tax obligations are also mitigating circumstances.

    Continue reading:What do I need to do to get mitigation?

    What are the penalties for tax evasion?

    In the case of tax evasion, there is on the one hand back payments of the tax evaded plus evasion interest of 6% per year. In addition, there are fines or imprisonment. Whereby the amount of the imprisonment is 5 years. In particularly severe cases, this increases to 10 years.

    Continue reading:What are the penalties for tax evasion?

    Where can I submit a voluntary disclosure?

    To avoid additional penalties for tax evasion, you can report yourself. You make the voluntary disclosure to the responsible tax office. All incorrect numbers must be corrected and submitted in the correct form. The missing taxes have to be paid back. Depending on the individual case, there may be surcharges.

    Continue reading:Where can I submit a voluntary disclosure?

    What does voluntary disclosure in the event of tax evasion do?

    If you report yourself to the tax office for tax evasion before the authorities become aware of the crime, you can avoid prosecution. Thus one escapes fines and imprisonment. The evaded taxes must still be paid plus evasion interest.

    Continue reading: What does voluntary disclosure in the event of tax evasion do?

    Which lawyer do I need for tax evasion?

    ‌A lawyer specializing in tax law will help in proceedings for tax evasion. He can also provide advice in the case of a voluntary disclosure. In the process, he knows factors that mitigate punishment and incorporates them into his defense strategy.

    Continue reading: Which lawyer do I need for tax evasion?

    Is tax evasion time-barred?

    The statute of limitations for tax evasion is regulated on the one hand in criminal law, where the offense expires after 5 years from the end of the act. The limitation period begins with the announcement of the incorrect tax. In tax law, the assessment period is at least 10 years; this period can be longer depending on the case.

    Continue reading: Is tax evasion time-barred?

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