The implementation of the new legal situation guarantees full information across the border for tax authorities and tax investigations. The authors describe resulting consequences. Red.
In the case of Klaus Zumwinkel, the former board member of Deutsche Post AG, the camera team was already ready before the start of the raid and when he left under police escort. As a result, it could have been legally clarified whether tax evaders could be convicted at all on the basis of “data that was first stolen and later sold on, as it were, as stolen goods”.
As of 1 January 2010, this question will finally be resolved, because an agreement between Germany and Liechtenstein will then come into force, which will ensure almost all exchange of information in tax matters.
No security for those affected
Hand in hand with Liechtenstein’s commitment to implementing the OECD standards, some banks have divested themselves of their own fiduciary business – but the data is by no means safer with the bank-independent fiduciaries in Liechtenstein. This is because requests for information from the criminal or tax authorities only have to comply with certain formalities.
Fishing expeditions allowed
The name of the taxpayer may be the subject of the request for information to the Liechtenstein authorities – but it is sufficient if, for example, the name of the front company (e.g. the foundation or establishment in Liechtenstein) or only an “account number” is known which is sufficient for identification.
Conversely, information can also be requested if German authorities become aware of telephone, letter, e-mail or fax traffic – the Data Retention Act legalises more intensive surveillance. Personal visits can also easily lead to suspicion through traffic enforcement.
Change of financial centre?
The tax offices can organise the corresponding exchange of information as a standard “serial letter”, as it were. A specific statement of special reasons is usually not required for this.
In particular, a request for information would only be groundless if all the data were already available to the German authority. The tax authority in Liechtenstein therefore only carries out a formal examination of the requests for information – substantive examination could only be rudimentary.
Broad information opportunities
Information on owners, shareholders, beneficiaries, fund and company shares as well as founders can be obtained from banks, insurance companies and the tax administration. It is sufficient if the reference of a camouflage construct or a person is presented as a suspicion, as it were:
The tax authorities and financial institutions in Liechtenstein must then open their books and provide the relevant information. The requested Liechtenstein authorities shall take all appropriate measures to obtain the information requested. The taxable person concerned shall not be informed of this if this would jeopardise the purpose of the investigation. This should usually be the case.
Ways out of the tax trap?
The fact that from 1 January 2010 information can only be obtained for tax years beginning at that time is explosive, but the information obtained can also be used for the valuation of previous years. This retroactive effect means that even the removal of funds or the dissolution of cover constructions and clean reinvestment does not provide any security – after all, trustees and financial houses still have to keep their files for many years.
Other dubious offers from financial houses also hardly lead to the goal. Even if the assets were transferred to a “fund with final withholding tax”, the statute of limitations for tax evasion would begin to run, but the statute of limitations for criminal money laundering would never begin to run. similarly, the vast majority of offers for an investment in a life insurance policy shell would have to be judged as tax-damaging or punishable money laundering, namely as a punishable endeavour to return such black money to the legal economic cycle.
Expert advice from bank tax advisors?
About 70 percent of the world’s literature in tax law concerns German tax rules. Foreign tax advisors regularly get a bloody nose when advising on German tax law. It is important for those affected that the statutes, articles of association or partnership agreements of “camouflage constructs” are often deficiently drafted.
These deficits from the “wealth management” of the financial houses often lead to their liability. However, in individual cases there is the option of limiting the tax damage and the additional payments. “Self-disclosures” can then not only lead to immunity from prosecution, but also limit back taxes to a fraction of the usual amount.
The path to legalisation may mean claiming compensation for investment, advisory and tax losses from the financial house. For example, many clients were legally denied tax-reduced or completely tax-free financial products. It is precisely this that can mean a financial loss for which the financial house is responsible due to unnecessary taxes.
Often there is an option to legally reduce one’s tax liability economically significantly. By way of example, fault may be reduced in accordance with the case law of the European Court of Human Rights. Already from an evasion in the amount of 100,000 euros of income tax, a prison sentence is usually imposed – from a million euros of evasion, a suspension of probation is regularly no longer an option.
Time and again, former bank employees from the Alps or the Caribbean have “stolen” data – or international banks have disclosed customer data in violation of banking secrecy. The new state treaties on the exchange of information now legalise a de facto abolition of banking secrecy for taxpayers in Germany.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
www.kreditwesen.de (published in Vermögen & Steuern, issue 01/2010,pages 26-27)
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About the author
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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