Explosive: “tax-neutral black money”

Liability for taxes evaded by clients in banking and financial advice


Advice, information and conduct duties/tasks of an asset manager with a KWG licence, a sales-oriented investment advisor and a structured financial planner in the presumption, recognition, support and supervision of the financial planning process. Aid for liquid forms of investment with tax-reducing effects/potential – limits and transition to the GWG (money laundering).

Since 1993, an estimated 2 trillion euros have flowed abroad in the context of capital flight. Bankers and asset managers are often personally liable for the tax loss. Especially in the case of criminal aiding and abetting. This could result in the tax authorities losing around 1000 million euros of tax revenue annually.


BGH decision

The Federal Supreme Court convicts bank employees of transferring money abroad. In its judgement of 01.08.2000 (AZ. 5 Str 624/99), the Federal Court of Justice confirmed that bank employees make themselves liable to prosecution for aiding and abetting tax evasion by supporting the transfer of capital abroad. The courts let themselves be guided by circumstantial evidence that reveals the concealment or anonymisation of the origin of money. The banker, financial planner or asset manager need not be aware of the details of how the client evades taxes.


What is aiding and abetting – what is unpunished?

If the client’s actions are exclusively aimed at committing a criminal offence and if the person providing assistance (banker, asset manager, investment adviser) knows this, his contribution to the offence must be regarded as aid treatment. Co-knowledge is enough to ensure that the action always loses its “everyday character” and means a “solidarity” with the perpetrator – so that it can then no longer be regarded as socially adequate.

If, on the other hand, the person providing assistance does not know how the contribution he/she has made is being used by the customer, or if he/she only considers it possible that his/her actions are being used to commit a crime, his/her actions are usually not yet to be judged as punishable aiding and abetting – unless the risk of punishable behaviour of the person he/she is assisting was so high that his/her assistance was “intended to promote a perpetrator who is recognisably inclined to commit a crime”. It does not matter that the tax was not yet due, or that the decision not to submit the tax return by the customer will be years later in the future.


Financial planning as evidence

In many banks it is common practice that financial plans are collected and stored centrally. This also applies analogously to money transfers to Liechtenstein, Switzerland and Luxembourg. It is not unusual for the customer to be told that there are no records – the tax investigation department (Steufa) has already visited many a credit institution several times to collect such documents. The size of an institution or an asset manager is not an indication of whether or not State aid acts occur regularly.


The tax authorities also imposed fines as part of the investigation proceedings against the banks. The legal basis for this was the collection of profits generated by the bank through the transactions. Under the conditions of §§ 70 to 72 AO, a tax liability of the credit institution/asset manager and a liability or payment obligation for the evaded taxes can also be considered.


Liability of the Asset Manager with §-32-KWG-Admission

Some asset managers do not suspect that they are personally liable for their clients’ taxes (§§ 33 ff in conjunction with 69 ff. AO). For the asset manager’s liability it is irrelevant whether the client’s custody account is located in Switzerland or abroad.

The periodic examination of the financial circumstances or the ongoing bookkeeping in the family office sometimes leads the asset manager to be forced to accept the tax dishonesty of his client. The professional advice to “only plan tax-neutral money carefully” rarely leads to the goal – after all, real estate around foreign countries can raise the question of where the money for the purchase price comes from.


Tax liability for other professional groups

Legal representatives of legal and natural persons are also liable for third-party tax liabilities: In the case of GmbH insolvency with open tax debts, the managing director is personally liable. Similarly, an estate administrator who “forgets” to declare and pay the inheritance tax before the net assets are paid out has a similar fate. Other persons affected are in particular carers, guardians, custodians and executors of wills.


by Dr. Johannes Fiala


by courtesy of

www.finest-planner.net (published in finest-Planner Report 01/2008)

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About the author

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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