Black money and the consequences

Tax evaders face prison sentences starting at 50,000 euros

Let’s not kid ourselves: Hunting and guns are popular men’s toys, and that’s where a lot of black money is spent by our customers, because they can’t put it into the regular economic cycle or – far more often – because the wives aren’t allowed to know what their husband’s hobby costs.

IN how many gun cabinets used to be cigar boxes with customers’ names on them, where the gunsmiths collected the customers’ black money, and when the box was full, there was the next gun. Many a gunsmith was inclined to let the black money continue to operate in the shadows as such. Or the father or grandfather put something aside in the fat years, and now that the business is going worse, one is tempted to put this money back into the business. The following article will tell you about the dangers.


The threat of the finance minister with the cavalry

There was no need for a political verbal attack on black money. This is because the ruling of the Swiss Federal Administrative Court of 5.3.2009 had already made “fishing expeditions” possible for tax authorities by means of administrative assistance from Switzerland. This heralded the melting of the camouflage constructs (foundations, trust & Co.) via banks from the Alps. Hundreds of billions have been withdrawn from affected major banks in recent months.


Serious tax evasion as a predicate offence to money laundering

Since 28.12.2001 even negligent money laundering is punishable. The Federal Court of Justice (Case No. 1 StR 416/08) clarified in its judgement of 2 December 2008 that a case of particularly serious tax evasion (“on a large scale”) exists from an evasion amount of 50,000 euros, so that a fine is regularly no longer sufficient. From 1 million evasion is regularly no longer a suspension to probation in question. This is in line with the BGH’s line on fraud: From an amount of about 50,000 euros, the BGH considers a qualified serious fraud as given (BGH judgment of 22.07.2004, Az. 5 StR 85/04). In the case of “normal” tax evasion (unlike, for example, in the case of the VAT carousel), the limit for a serious case is 100,000 euros.


Tax estimation in case of evasion

If larger assets disappear, the tax offices assume in case of doubt that these assets were invested somewhere as “black money”. The burden of proving that the funds were spent and not generating “tax-neutral income” somewhere is on the citizen. The tax office will then assume, for example, 8% return p.a. and simply estimate the tax according to §162 AO. In addition, there is interest on evasion. similar when you can not explain the origin of suddenly – again – appearing assets. The individual amounts of evasion may not be simply added together for the purposes of criminal law in the first instance. However, there may be continued tax evasion. A person who knowingly and with a unified will repeatedly commits tax evasion and prolongs the success of his tortious conduct with each tax declaration falls under this state of affairs. This is the case, for example, if the same taxable assets are continuously concealed, if an undeclared account is kept for years for certain business income or if an annuity is not declared. The continuing offence is punishable as a single act of tax evasion. Then the evasion amounts are to be added.


Statute of limitations and asset infection

Regardless of the severity of the evasion, the statute of limitations for prosecution under criminal law is based on the basic offence and used to be five years, §78 StBG. With regard to the tax payment obligation, a ten-year assessment period applied in accordance with § 169 II 2 AO.

On 12/25. In 2008, the Annual Tax Act 2009 came into force: The criminal statute of limitations for serious evasion /§370 III S.2 AO, e.g. “to a large extent”) was extended by § 376 I AO from five to ten years. This applies to all cases of evasion with a start of the limitation period or interruption (e.g. by discontinuation of proceedings) after 24.12.2003.
In the case of money laundering, the statute of limitations does not begin to run until the act has been completed, i.e. in particular the concealment, the disguising of the true origin or the endangering of access to the assets by law enforcement authorities. In the case of this continuous offence, the five-year limitation period does not begin to run until the last partial act. In this respect, it would be a mistake to believe that one could legally “decolorize” large amounts of black money for tax purposes and then be exempt from punishment. Moreover, assets can be confiscated even in the case of money laundering, even if the tax offence has long been time-barred.


Criminal offers from banks and insurance companies

Life insurance companies from Liechtenstein and Luxembourg offer insurance wrappers – no income tax is due for the period of asset growth in this construct if it is (rarely found) correctly structured. However, in such cases, the statute of limitations for money laundering does not start to run at all. It is the same when black money is “discreetly transferred” from abroad to a credit institution in Germany and from then on flat rate withholding tax is deducted. And finally, the “one-time investment” in a German life insurance policy does not lead to the goal in this respect either. The criminal providers are often personally liable and expose themselves to the suspicion of fraud when they pretend a “decolourisation” or “tax exemption” to capital investors.


Advice of a Saxon Ministry of Finance

Contrary to all criminal advice, also spread in the press as “tax tips”, the following applies: “The way back to legality for capital investors with black money in tax havens is exclusively the tax self-disclosure. There are no alternatives to this.” (Letter from the Saxon State Ministry of Finance, File No. 31-S 0702 -6/2 – 35924). Professional implementation also includes self-disclosure in accordance with money laundering regulations. Finally, the “infection” of the black money with money laundering also remains in the case of inheritance and donation, and would therefore be transferred along with it, as it were. Apart from self-disclosure, any other offence of re-introducing money outside the legal economic cycle is simply criminal money laundering, because that is what is meant by money laundering. If there were another legal way to divert criminal money into the proper economic cycle, then the Mafia would also take this way and avoid criminal money laundering – but it is still money laundering. Accordingly, one may therefore appreciate all “safe” guidance in this direction.


by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm

with kind permission of (published in “Büchsenmacher” 09/2009, page 9-10)

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Dr. Johannes Fiala Dr. Johannes Fiala

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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