Tax debt and liability

Tax debt in case of tax evasion

The taxpayer must pay the taxes actually incurred. However, especially in assessment cases, the amount of tax to be paid regularly differs from the amount of evasion and tax damage in the criminal law sense.

This is because taxation proceedings run independently and on an equal footing with criminal tax proceedings according to their own procedural rules. Whereas in criminal tax proceedings the tax evasion must be proven in accordance with the principle of doubt ("in dubio pro reo"), also with regard to the specific amount, in taxation proceedings the (burden of proof) rules of the Tax Code apply. Accordingly, the tax office must also prove the fulfillment of the tax facts on the merits. However, if the taxpayer does not fully comply with his duty to cooperate in the taxation proceedings, this is to his detriment.

As a result, it is often sufficient for "undefended" taxpayers that the tax office describes a more or less plausible set of facts according to which the tax liability arose. If the taxpayer cannot refute these facts, the tax court and the Federal Fiscal Court will uphold the decision of the tax office. The consequence is the undermining of the right to silence under criminal law, which the legislator deliberately established in Section 393 (1) of the Tax Code.

Thus, the obligation under tax law to submit tax returns in the taxation proceedings also remains in force. After the initiation of criminal proceedings, the tax obligations, i.e. also the submission of tax returns, can no longer be enforced by means of coercion in accordance with Section 393 (1) sentence 3 of the German Fiscal Code (AO). However, the consequence of a lack of cooperation is, as a rule, in particular the estimation of the bases of taxation pursuant to § 162 AO. Even if so-called penalty estimates are inadmissible (see BFH BStBl. II 2001, 381), considerable pressure can be exerted on the accused on the basis of § 162 AO. This is because the uncertainties "naturally inherent in an estimate" are to the detriment of the taxpayer in taxation proceedings, unlike in criminal tax proceedings. In addition, the obligation to submit correct (also incriminating) tax returns for subsequent years can create a risk of self-incrimination.

In the majority of cases, the defense in criminal tax proceedings therefore also includes representation in the tax dispute, if necessary also in cooperation with the client's tax advisor. The intended or executed assessment of taxes in connection with criminal tax proceedings is often subject to errors. In this respect, the tax offices are unwilling or unable to consistently apply the tax code, in particular with regard to the determination of the facts relevant to the proceedings. Therefore, even if an estimate pursuant to Section 162 of the German Fiscal Code (AO) cannot be defended against in individual cases, the prospects of success with regard to the reduction of the estimated amounts are often given.

Interest on evaded taxes

The evaded taxes are subject to interest of 0.5 percent for each full month pursuant to Sections 235, 238 AO. The interest is not tax deductible (Sections 4 (5) sentence 1 no. 8a EStG, 12 no. 3 EStG, 10 no. 2 KStG).

Liability for Tax Evasion

According to § 69 AO, the persons named in §§ 34, 35 AO are liable for tax evasion by the taxpayers they represent. The liability therefore concerns the legal representatives of natural and legal persons (AG board of directors, GmbH managing directors, etc.) and the managing directors of unincorporated associations of persons and estates (§ 34, para. 1) as well as the person who acts as a person authorized to dispose of property in his own name or in the name of a third party insofar as he can legally and actually fulfill the duties of a representative named in § 34, para. 1.

Anyone who is not himself liable for tax may be held liable in accordance with Section 71 AO. According to this, anyone who commits tax evasion or participates in such an act is liable for the evaded taxes or unlawfully granted tax benefits as well as the evasion interest pursuant to Section 235 AO. This may, for example, affect the tax advisor who provides (even only psychological) assistance to the tax evader. Liability according to § 69 and 71 AO can exist in parallel.

In connection with sales tax carousels, liability pursuant to § 25d UStG may be considered.