Not a carefree package from the legislature:
Several heads of financial services associations have taken the lawmakers’ delays by the change of government in their stride. Proudly it is announced that by a new BMF letter of 25.11.2005 the situation was defused up to beyond 01.01.2006. Associations tell a lot when the day is long. The realities are different.
Confidential information on the audit:
The bosses of the tax audit sit with the Oberfinanzdirektion (OFD), to them the tax offices are subordinate. The new target clientele “the financial service providers” is already in the sights of auditors and investigators. Anyone who reads the essays in the professional journals for tax lawyers also knows which way the wind is blowing for the decision-makers at the OFD. One phone call is enough to make sure: “We enforce the law, of course”.
When asked about the significance of the BMF letters of 25.11.2005 and 30.05.2005, it is emphasised that this only concerns a small aspect of the activity. A distinction must be made between the various areas, such as insurance brokerage, brokerage of closed-end investments or funds, activity as a tipster, etc.
For the rest, the law applies ” and we enforce it:
But what do these words want to tell us? Quite simply: Also for the past! the tax office goes on the search for facts or cases, in which the value added tax should have been declared and paid.
Since 2002 it has become easier for the tax authorities ” the sales tax auditor no longer has to register, he simply stands in front of the door and can look at the vouchers immediately. Management consultant Pedersen therefore recommends:
“Ask your tax advisor specifically how things stand with your personal sales tax liability. Since the problem of VAT has been circulating in the market for years, he will certainly have already given you appropriate recommendations for action in the past.”
In practice, we also see specific cases where office and marketing grants. which were declared by the responsible tax office as subject to sales tax, regardless of whether they were sales-dependent or “independently defined”.
Also with the marketing subsidy from an insurance company or any sales level, the same problem arises ” even if such cases are gladly carried before court. A suspension of enforcement, i.e. a deferral of payment (if necessary also against payment of interest, as a deferral), rarely exists in this case.
Eyes closed and through ” or the sure bankruptcy of the mediator”:
The auditor’s bill from the tax office then reads as follows: 10 years ago you would have had to pay 10,000 euros in VAT, plus 1% “penalty interest per month” equals 24,400 euros; 9 years ago you would have ” The auditor adds up ” the financial service provider is thinking of insolvency proceedings: But unfortunately, in the case of “tort, tax evasion, etc.” there is regularly no relief from debts related to criminal conduct.
And the auditor can audit back 10 years?:
If there is tax evasion involved, it goes back 10 years – otherwise only five years. Mediator V tries to negotiate with the examiner – after all, various editors had put something completely different into the public domain.
The auditor counters: “Yes, what do you think tax consultants are for? You could have asked the tax office for a binding answer.”
An example case from practice:
Agent V receives mail from the Hamburg tax office. The tax office has audited a ship fund – now it is about payments as “kick-backs” to customers and commissions to “sub-brokers”. Can both trigger VAT?
Professionals instead of carelessness:
We can only warn against so-called experts without practical experience. All-clear statements in press releases and the trade press are absolutely beside the point. The pros check with the IRS – or have an accountant do it. There are financial service providers who have been paying VAT (not on everything) for decades – for these well-educated and well-advised market participants there is then no threat of a debt trap due to a VAT special audit.
By the way, it is still possible to escape the penalty, which is added to the above “interest”, by making a self-disclosure. Tax profits – it can also be a little more!
A surefire way to help balance the federal budget is to have your accounting “discarded.” Then the profit is estimated by the tax office, perhaps at first on the two or threefold, § 162 AO.
Since 01.01.2002 the accounting also of the financial service provider has to comply with the “GdPDU” (cf. www.elektronische-steuerprüfung.de). Surely you already own a special accounting solution or you receive an accounting with “IDEA-checkable” data” from your tax consultant since 01.01.2002.
What every financial advisor should be aware of is the danger he puts himself in by not acting: If, in the event of an external VAT audit, it is determined that he is liable for VAT, he naturally has the option of appealing and taking legal action. This recommendation will also be made by the tax advisor of personal choice. However, five years may well elapse before a final decision is reached.
In this time the taxpayer must live every day anew with the uncertainty that perhaps retroactively horrendous tax arrears payments come on him. This psychological pressure is likely to leave its mark on many entrepreneurs and have a lasting impact on their day-to-day business. Because, the taxpayer can ask himself every day anew: does it still make sense to go to the office if I lose the case?
In this respect, TUTOR boss Pedersen recommends: prevention is better than cure, because the latter can only go wrong.
Lawyer Fiala follows up: It can secure itself each mediator and each selling at least regarding the criminal law, because there is the instrument of the “obligatory information of the finance” also in uncertain cases, also around clarity in the files to possess.
Carsten Lucht explains the handling of his FinanzFachOffice eG: “All super commissions are booked including sales taxes. This offers every intermediary partner and comrade a distinctly secure position in terms of sales tax.
by Peter L Pedersen, management consultant (www.tutor.de) and Johannes Fiala, lawyer (www.fiala.de)
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About the author
PhD, 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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