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The complexity of tax law is constantly increasing, while the criminal law governing tax offences aims to ensure compliance through strict sanctions, meanwhile severely limiting the possibilities of voluntary self-disclosure to avoid prosecution (section 371 Tax Code). Reports of investigations into suspected tax evasion, often on a large scale, can be found almost daily in the press.
This aspect of criminal law affects both individuals and small- and medium-sized companies, as well as internationally active groups and credit institutions, although it is crimes such as VAT carousels or fraudulent cum-ex transactions that draw the public’s attention to highly complex issues.
Tax crimes often accompany other crimes
The risks of being exposed to criminal tax investigations are, however, much more complex, and can affect commercial enterprises, e.g. as regards VAT, as well as those acquiring companies. Tax crimes often accompany other economic crimes (e.g. unfair competition, accounting fraud, all forms of illegal employment, etc.). Consultants (e.g. tax advisers, tax lawyers) may be subject to allegations of tax evasion or of aiding such offences, with severe professional legal consequences.
Monitoring of non-criminal consequences
In addition to dealing with complicated legal situations, the defence of criminal matters involving taxation always requires the avoidance of non-criminal consequences, up to and including the loss of commercial trustworthiness, the individual’s suitability as a director (section 6 Limited Liability Company Law), or the trustworthiness of financial service providers and board members of credit institutions overseen by the German Financial Supervisory Authority (BaFin). The adaptation of tax compliance measures to a company forms a proper and necessary part of risk management so as to avoid violations of the rules.