White wash black money

Criminal offers from some financial houses. Why only the voluntary disclosure leads to the goal with assets over 50,000 euros.


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 March 2009 had already made “fi shing 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Hundreds of billions have been withdrawn from affected major banks in recent months. Since 28 December 2001, even negligent money laundering has been 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 euros evasion is regularly no longer a suspension to probation in question.

This is in line with the BGH’s approach to fraud: From an amount of around 50,000 euros, the Federal Court of Justice considers qualified serious fraud to be given (Federal Court of Justice ruling of 22 July 2004, case no. 5 StR 85/04). In the case of “normal” tax evasion, the limit for a serious case is 100,000 euros. Tax estimation in the case of evasion If larger assets disappear, the tax offices assume that these assets were invested somewhere as “black money”.

The burden of proof that the funds have been spent and are not generating “tax neutral income” somewhere is on the citizen. The tax office will then, for example, assume an 8 percent return and simply estimate the tax in accordance with § 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, with continued concealment of the same taxable assets or years of keeping a black money account for certain business income.

The continuing offence is punishable as a single act of tax evasion. Then the evasion amounts are to be added. Regardless of the severity of the evasion, the statute of limitations for prosecution was based on the basic offence and used to be 5 years, § 78 StGB. With regard to the tax payment obligation, a ten-year assessment period applied in accordance with § 169 II 2 AO. At 25 December 2008, the Annual Tax Act 2009 came into force: the criminal statute of limitations in the case of serious evasion (§ 370 III S. 2 AO, e.g. “on a large scale”) was extended from 5 to 10 years by § 376 I AO. This applies to all evasion cases with a start of the limitation period or interruption (e.g. due to the initiation of proceedings) after 24 December 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 is committed. In this respect, it would be a mistake to believe that one could legally “decolorize” large amounts of black money for tax purposes and would then be punitively clean. 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 shell companies. For the period of asset growth, no income tax is due if the arrangement is correct (which is rare). 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. 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 procedure to reintroduce money outside the legal economic cycle is simply criminal money laundering, because that is exactly what is meant by money laundering.

If there were another legal way to divert criminal funds into the proper economic cycle, then the Mafi a would also go this way and avoid criminal money laundering – but it is always criminal money laundering. Accordingly, one may therefore appreciate all “safe” guidance in this direction.

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

by courtesy of

www.campingimpulse.de (published in Camping Impulse, issue 02/2010, page 40)

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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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