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§ 71 AO – the unknown standard

from
Markus Schmuck
Lawyer
Specialist in criminal law

Give me a call: 0261 - 404 99 25
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Eckhard Finke
Lawyer
Specialist in insolvency and reorganization law
Steuerberater

Give me a call: 0261 - 404 99 761
E-Mail:

The topic of the tax office is a tiresome one. A company manager cannot avoid it. However, what very few managing directors are aware of is the regulation of § 71 AO, the personal tax liability of the assistant for the taxes to be paid by a perpetrator. It is well known that the evader of taxes, including corporate taxes, is personally liable for the evaded tax. It is also known that in criminal tax proceedings, the statute of limitations is 5 years, but in tax proceedings it is 10 years. This means that on January 1, 2016, the managing director is still personally liable for the sales tax evaded by his company between 2005 and 2010, but could no longer be prosecuted for it. This is already evident from § 69 AO, since the managing director is responsible for the tax affairs of the company.

However, it is largely unknown that the so-called participant in a tax offense (§ 370 AO) can be held liable for the abbreviated tax of the perpetrator (§ 71 AO), which results in an increase in liability risk. The liability also applies to the interest incurred (§ 235 AO). The (knowingly working) accountant is thus liable for the evaded tax of his company. The managing director of a supplier company (50% with invoice and 50% without invoice, smile) is liable for the – expected – evaded tax of the recipient company, and the buyer of "black" labor is "liable" for the evaded taxes of the "main" culprit.

Since the evaded amounts relate to the profits that arose after delivery, for example, and were not reported, and/or, for example, in the case of a "VAT carousel", to the total tax amount of the entire construct, the liability amounts (within the 10-year period) can be extremely high. The "accomplice" usually does not consider this sufficiently in his risk analysis.

The extent of the liability is limited only by the amount of the reduction (i.e. the actual liability loss) of the tax offense, as well as by the participant's intent, which must be proven in each case. Of course, liability for an attempted tax evasion is not possible. However, it should be noted that the recourse to the participant in accordance with § 219 S.2 AO is not possible on a subsidiary basis to a previous recourse to the actual perpetrator. The decision as to whom the tax office takes recourse is at the discretion of the tax authorities.

The statements represent initial information that was current for the law applicable in Germany at the time of initial publication. The legal situation may have changed since then. Furthermore, the information provided cannot replace individual advice on a specific matter. Please contact us for this purpose.