The tax advisor is liable to his client if, for example, a fine is imposed on the client due to carelessness (BGH, judgement of 14.11.1996, ref. IX ZR 215/95; BGH, judgement of 15.04.2010, ref. IX ZR 189/09). Compensable damages would also include compensation for deprivation of liberty, the necessary bail and any resulting loss of property and income, any fines, and for the costs of criminal defence.
Professional obligation sufficiently high liability insurance
The statutory minimum cover of 250 TEUR for lawyers, StBs and StB-GmbHs will often not be sufficient to insure the typical risk of the client resulting from their activity due to damages and consequential damages.
Average insurance agents are not trained to determine the amount of coverage required. However, according to the so-called “Sachwalterurteil” of the Federal Court of Justice (BGH) (dated 22.05.1985, file no. IV a ZR 190/83), the insurance broker has the cardinal obligations to investigate the risk and to examine the object. If coverage amounts are neither determined nor set by the broker, the broker’s professional liability insurance is also likely to be free of performance. An “investigation” limited to asking the policyholder about the desired sum insured without any related advice is hardly likely to satisfy the requirements to be placed on the broker’s activity, just as when the doctor asks the accident victim who has just been admitted: “Well, how much blood plasma would you like for a transfusion today?
The decisive factor is that StB/RA/WP are obliged to insure themselves “adequately”. Thereby you meet insurance brokers, who obliviously and (only conditionally?) intentionally, but ineffectively (BGH, judgement of 20.01.2005 – III ZR 251/04) want to exclude consultation obligations to the height of the insurance cover by form contracts, § 307 BGB. Clients who do not make sure that their “self-disclosure advisor” is also adequately insured are allowing bocce to be played with their own heads as a wager in the end.
Legal error in the deal with the prosecutor
If the taxpayer admits – for example in the context of an understanding with the justice over the punishment which can be expected – an own evasion intention, although he evaded his taxes only negligently, then he cuts himself off thereby the recourse under civil law against his own tax advisor – even if this had not possessed a permission (BGH, judgement of 14.11.1996, Az. IX ZR 215/95). In addition, the penalty range in the case of own negligence of the evader is only up to 50 kEUR, § 378 tax code. Only in the case of negligence is it left to the taxpayer alone to decide when to correct his information.
A good idea to mitigate the penalty according to §§ 46, 46a StGB would be to declare all evaded amounts – including those where the tax claim of the tax authorities is already statute-barred – and to pay promptly also these statute-barred taxes voluntarily. Here, too, it should be noted that advisors are required by duty to fully investigate the facts of the case. Sometimes, however, this is deliberately thwarted by the client according to the salami tactic, so that the consultant only has to have the completeness of the information confirmed anyway.
Tax advice from financial advisors and foreigners
In many cases, there is only negligence on the part of the taxpayer when insurance agents, bank advisors and predominantly foreign tax and legal advisors advise wealthier clients of banks and insurance companies as alleged experts or provide expert opinions. The support of domestic clients by foreign advisors (not licensed in Germany), for example by financial plans including tax advice or expert opinions from the “wealth management or private banking” of a bank, is an infringement of the Legal Services Act or the Legal Advice Act (OLG Köln, judgement of 19.12.2003, ref. 6 U 65/03; BGH, judgement of 05.10.2006, ref. I ZR 7/04).
Multiple indirect perpetration
If an alleged evader is discovered on a tax CD, an obvious assumption alone is not sufficient to convict him (AG Nürnberg, Az. 46 Ds 513 Js 1382/11). Rather, the taxpayer may also be the object of indirect perpetration by his insurance company or bank if he has been led to believe that his tax exemption is legal to that extent. Typically, financial products from abroad are advertised as being tax-free in the home country. Here it will be important that the taxpayer simply puts all financial products to the test so that his voluntary disclosure is not incomplete and thus ineffective. From experience, this would only be a partial confession, which would then result in a search of the house and the forfeiture of immunity from prosecution.
Other forgotten tax reductions
Renowned advisors sometimes overlook the fact that it is not just a question of evading income tax and the solidarity surcharge. In addition, there is often the church tax. Even those who have voluntary health insurance must still pay contributions to the GKV on the previously concealed investment income. Not infrequently, the evader is also a compulsory member of a pension chamber and pays contributions according to his income. Or there is a pension insurance obligation as a self-employed person, also with contributions depending on income. Some – former – wives will also easily recognise the chance to increase the gain and pension equalisation and maintenance payments – possibly also a process fraud due to false statements. If, for example, income-related subsidies are claimed, subsidy fraud may also be involved.
With a simple self-disclosure alone at the tax office it will be done rather rarely.
Lack of consistent control messages
Germans have an almost erotic relationship with forms, as a president of the Steinbeiß Foundation is said to have once put it. For decades, there have been loopholes due to the need to report one’s income or assets to various places. This opens the door to erroneous messages – whether intentional or erroneous. It is up to the legislature to ensure that all levies are collected equally and fairly.
Otherwise, the tax system will be exposed to the suspicion of no longer being in conformity with the constitution “due to a structural enforcement deficit or unconstitutional incorrect taxation” (cf. BFH, judgment of 24 April 2013, file no. II R 17/10). Freely after the motto: Why should actually the tax honest be the stupid one?
by Dr. Johannes Fiala and Peter A. Schramm
by courtesy of
www.network-karriere.com (September 2014 edition)
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About the author
Dr. Johannes FialaPhD, MBA, MM
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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