If it is subsequently discovered that information is missing from or inaccurate in the tax return, careful and legally sound action is required. Voluntary disclosure, which may exempt one from criminal liability, can lead to immunity under strict conditions, but it is formally demanding and prone to errors.
It happens more often than many taxpayers realize: After filing a tax return, it is discovered that certain income was not reported. This could include rental income from a leased property, interest income from foreign investments, or profits from trading cryptocurrencies. In such a situation, a measured approach is essential, as ill-considered steps can lead to significant criminal consequences.
First, it must be determined whether a simple correction to the tax return is sufficient or whether the elements of tax evasion have already been met. Not every inaccuracy automatically leads to criminal proceedings. The decisive factor is whether taxes were underreported and whether this was done intentionally or at least recklessly. This distinction is legally complex and should not be made without expert review.
If tax evasion has occurred, the law provides the option of avoiding criminal liability through a voluntary disclosure that exempts the taxpayer from punishment. The legislature has deliberately created an exception here to the general principle of criminal law, according to which a committed offense must be punished. The rationale behind this is the state’s particular interest in complete and accurate taxation, as well as in the repayment of evaded taxes.
Tax evasion is generally punishable by a fine or imprisonment of up to five years. In particularly serious cases, such as tax losses exceeding 50,000 euros, a prison sentence of up to ten years may even be imposed. Against this backdrop, the importance of voluntary disclosure should not be underestimated.
Voluntary disclosure, which exempts the taxpayer from criminal liability, aims to bring the taxpayer back to tax compliance before the offense is discovered by the tax authorities. The fiscal purpose of the penalty is not primarily punishment, but rather the full disclosure and payment of the evaded amounts, including ancillary charges.
However, the law imposes strict requirements on the validity of a voluntary disclosure. Completeness is particularly essential. All tax offenses of a given type that are not time-barred must be disclosed, generally covering at least the last ten calendar years. For example, anyone who has failed to report rental income over several years must fully report all affected years. A so-called partial voluntary disclosure is invalid.
In addition, all underpaid taxes must be paid in full. Statutory interest and, if applicable, an evasion surcharge must also be paid. Only when these financial requirements are met can immunity from prosecution be granted.
It is also crucial that there are no grounds for exclusion. A voluntary disclosure is not permitted if the offense has already been discovered or if the tax authorities have begun an investigation. Even an announced tax audit can, in certain cases, already result in exclusion. The timing of the submission is therefore of central importance.
In conclusion, it can be stated that a voluntary disclosure offering immunity from criminal prosecution is legally complex and strictly regulated in terms of form. Even minor errors in content, scope, or timing can render the disclosure ineffective. In such a case, it does not provide immunity from criminal prosecution but may be interpreted as a confession, which significantly worsens one’s criminal legal position.
We have extensive experience in criminal tax law and are familiar with the typical pitfalls of voluntary disclosure. We carefully assess whether a voluntary disclosure is necessary and still possible, prepare it in a legally sound manner, and handle all communication with the tax authorities. The goal is to ensure an effective, complete, and timely voluntary disclosure and to avoid unnecessary risks.
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.