Federal Court of Justice: Criminal bail and other security deposits are attachable

How seizure of a bond provided by a third party can still result in taxes –


The Federal Court of Justice (BGH, judgement of 22.07.2004, ref. IX ZR 132/03) recognises in constant jurisdiction that deposited penalty bonds and other security payments are attachable by creditors of the debtor. This applies both to the tax evader, whose criminal bail mitigates the risk of flight, and to the security deposit in civil proceedings
by deposit with the district court to avert execution while an appeal is pending.


Repayment claims due to deposit are attachable

In particular, even if the deposit or security is provided by friends or family, there is a risk that future claims for repayment may be enforced by the courts.
creditor (BGH, loc. cit.). This may be the case, for example, if the defendant is later acquitted or convicted, if an arrest warrant is suspended without the provision of security, or if, after the final judgment has been obtained, there is no longer any threat of enforcement in a subsequent instance and the reason for the provision of security thus ceases to apply. The claim
to repayment can, however, be protected against seizure by timely assignment, but this is hardly ever taken into account at the time of deposit. The donor himself must
think about his insurance, because unsolicited he does not have to be informed about his risk.


Liability trap of privately induced expenses in the books of account

If the operational necessity of expenses is missing, it is a so-called hidden profit distribution in the case of corporations (GmbH, AG) (FG Munich, ruling dated 17 December 2013,
Az. 6 K 1949/10). If a member of the Board of Management flies to work from his place of residence B in the company’s own helicopter – if such a place exists – or if a company vehicle is used for private purposes in breach of the contract, this is not permitted.
and if this is not prevented by the shareholders or the supervisory board, an assessment can lead to the conclusion that it is a case of remuneration in kind which is subject to wage tax (BFH, judgement of 11.2.2010, VI R 43/09). If, on the other hand, there is a hidden distribution of profits, there would not only be a potential “double” tax burden, but also the danger of
of the accusation of embezzlement as well as tax evasion – even if this behaviour was “common practice” according to the manager.


Managing directors and board members obliged to split personality

Specialists describe split personality as a person in which different personalities take turns controlling their behavior. Business managers can have very different conflicting interests as employees, shareholders and governing bodies. Thus, sometimes one function and sometimes the other will dominate the behavior.


In contrast, sole shareholder-directors often see their GmbH or AG as their property, to which they have no real obligations, and as a tax-saving instrument,
without any real function of its own. This then leads to behaviour that leads to problems with the tax office or public prosecutor, but also possibly with the GmbH or AG, after the insolvency administrator has the say there, and this, together with its creditors, develops a life of its own to the detriment of the former manager, of which he has never even begun to be aware.


There is a widespread way of thinking that as a business manager, together with the GmbH or AG, one minimises the taxes to be paid on both sides in a supposedly uniform interest.
However, the FA (and an insolvency administrator similarly) separates this interest between the manager and the corporation, a way of thinking that may not have occurred to the GGF before. Because up to now he considered the company as his property and part of his assets, without real existence, which is formally kept separate only for tax reasons. Few business managers see, beyond fulfilling the duties they have to perform for the corporation for others (taxes, social security contributions, …) also direct duties towards the company as such.


If, for example, a supervisory board tolerates the private use of company assets although this was not permitted, this can be seen as an implied amendment of the employment contract, which can later lead to a liability assessment for taxes and criminal tax proceedings.


Deposits and security provided by third parties often trigger taxes

If the deposit is paid by relatives, the tax authorities will ask whether, for example, a third party loan agreement had been agreed in writing in advance. Rarely is
it may be tax-free maintenance or marriage-related gifts – more often the question of gift tax and, in the case of later non-repayment, tax deduction may arise.


Actions for recourse against managers by owners, creditors and insolvency administrators

Business managers often overlook the fact that they are not only obliged to obtain appropriate expert opinions in the case of risky transactions (BGH, judgement of 20.09.2011, ref. II ZR 234/09): “The representative of a company in an executive body, who does not himself have the necessary expertise, cannot meet the strict requirements for an examination of the legal situation and the legal position incumbent on him.
to the observance of the law and case law only if he obtains advice from an independent professional who is professionally qualified for the question to be clarified, giving a comprehensive account of the circumstances of the company and disclosing the necessary documents, and subjects the legal advice given to a careful plausibility check.” In the case of criminal liability issues, there are additionally several dozen higher court decisions on expert opinion quality to consider.


Already the Roman provincial governors firmly assumed that after their return to Rome they would be sued there by the provincials for unjust enrichment. The provincials usually had nothing else to do, because the next governor was also enriching himself, and they therefore needed money. Each governor therefore squeezed out so much,
that he could bribe from it both the judges as well as the witnesses and the prosecutors, and in the settlement restore a part of it, and still the desired fortune
left to his own devices. Thus, it is also standard today for successors in management to sue their predecessors for damages for their errors and omissions.
If they do not do so, they make themselves liable for damages for the amounts that could have been obtained as recourse from the predecessors. In this way, claims for damages which have long since become time-barred can be asserted by the insolvency administrator against the last director since the first damage was caused to all preceding directors.


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

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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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