German Clamping Down on Tax Evaders

September 25, 2014 Taxation in Germany

tax evasion in GermanyBERLIN – Germany is set to further crack down on tax evaders by restricting access to a voluntary disclosure program while also extending the statute of limitations on tax crime.

On September 24th the Cabinet of Germany approved new legislation lowering the threshold currently applied to the country’s voluntary disclosure program, a move which will make it harder for tax evaders to come clean about the past transgressions without facing any legal consequences.

Currently, tax evaders in Germany may come forward to tax authorities and disclose details of their unpaid liabilities, in exchange for not facing any penalties or additional fines, under the condition that the amount of taxes owing is less than EUR 50 000, with a penalty of only 5 percent on any amount exceeding EUR 50 000.

Under the conditions of the new legislation, the threshold will now be lowered to EUR 25 000, and the penalty rate on any taxes owing above that amount will be hiked to 10 percent.

If approved by parliament, the new law will come into effect from January 1st 2015.

Alongside the tightened threshold, the statute of limitations for tax evasion will also be doubled from the current 5 years to 10 years.

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