Your protection in Criminal Tax Law

If the tax return was incorrect or incomplete or if income was even completely concealed from the tax authorities, it is usually only a matter of time before the tax evasion brings the investigators onto the scene. Tax law provides a last chance to return to tax honesty without penalty: voluntary disclosure.

Making an effective voluntary disclosure requires a high level of expertise and careful analysis of the causes and motives for the incorrect or incomplete tax return: was the tax evasion due to recklessness, negligence or intent? In companies in particular, clarifying the facts is usually anything but trivial. The decision as to whether a voluntary disclosure should be made at all is also linked to a large number of preliminary questions, which often have to be answered under great time pressure. Because one thing is certain: as soon as the tax authorities become aware of the tax evasion, it is no longer possible to make a voluntary disclosure to avoid prosecution.

When preliminary proceedings are initiated, the defense comes to the fore. However, the rights and obligations under criminal procedure that must be observed in this context, as well as dealing with investigating authorities, public prosecutors and criminal courts, must always be viewed in conjunction with the tax proceedings that are ongoing in parallel. This is because the findings of the investigating authorities – in this case usually the tax investigations – are evaluated by the tax authorities and thus become the subject of appeal and legal proceedings before the tax courts. This duality of proceedings reflects the complexity of criminal tax law.

Determining the facts of the case and assessing them from a tax perspective is particularly important in criminal tax proceedings. The opinion of the tax authorities is not always in line with the case law of the tax courts or the prevailing doctrine. In such cases, it is important to put together valid arguments to refute or at least weaken the arguments of the investigating authorities. Even if it turns out in the end that tax claims exist objectively, there is often still sufficient room for argumentation on the subjective level, which is important for criminal proceedings.

On behalf of our clients, we prepare detailed legal opinions on tax-related issues that help them to present and evaluate complex facts in the light of case law and tax doctrine. In this way, we create a valid basis for discussions with the tax authorities in mutual agreement procedures, for objection and legal proceedings as well as for an effective defense if criminal tax proceedings cannot be averted.

The starting point for criminal tax investigations is often a tax audit. Here, the tax office and the tax investigation usually work hand in hand. The appeal procedure offers the opportunity to discuss the tax-related issues in detail with the authorities and to arrive at a new assessment of the facts, which then also becomes relevant for the criminal proceedings.

In the course of appeal proceedings, we first lodge an objection on your behalf so that the tax assessment does not become final. We conduct discussions with the tax authorities on your behalf and together with you and submit applications for suspension of enforcement in order to avoid tax payments falling due until the proceedings are finally concluded – ideally in your favor. If you wish, we can also work together with your usual tax advisor to find solutions.

Experience shows: The tax authorities often remain firm, especially when it comes to insisting on the findings of a tax audit. Only the next step can help here: going to the tax courts.

Unlike the civil or administrative courts, there are only two instances in the tax courts. The tax court is the only instance that assesses the facts of the case in their entirety. The Federal Fiscal Court alone reviews whether the law has been applied correctly. In order to be successful before the tax courts, it is therefore essential to fully understand the facts of the case from the taxpayer’s perspective and to provide the necessary evidence.

Based on our experience in litigation, we will represent you before the tax courts. We advise you in detail on the prospects of success and possible risks of a lawsuit and, where possible, work towards an amicable solution with the tax authorities. If a conflict cannot be resolved, we will fight for your interests before the tax court.

Establishing effective compliance in the company is one of the foremost duties of management today. Proof of compliance can exempt management and executives from liability claims or reduce the associated risks to an appropriate level. At the same time, functioning compliance systems protect the company from reputational damage and unforeseeable financial burdens.

All of this applies in particular to tax law, which is already particularly susceptible to liability due to its complexity. Tax processes permeate the entire company and require the involvement of a large number of employees and departments in order to ensure tax compliance.

We will be happy to advise you on assessing the tax risks within your company and the steps required to set up a tax compliance management system. If you already have a tax CMS in place, we will be happy to subject it to a critical review on your behalf and advise you on any identified weaknesses and optimization opportunities.