Voluntary disclosure protecting corporate bodies against criminal prosecution and enterprises against regulatory fines - The relationship between sec. 30 (4) sent. 3 OwiG and secs. 371, 378 (3) AO
If executives of an enterprise commit tax evasion or recklessly understate tax in their official capacity, this can result both in the personal conviction of the particular executive and in a regulatory fine on the enterprise. These risks can be minimized by a coordinated voluntary disclosure.
If it is discovered in an enterprise that tax returns have not been submitted in the past, or have not been submitted accurately, and this has meant that tax may have been understated, the executives of the enterprise, i.e. normally the managing directors or management board members, have a duty to inform the revenue authority without undue delay. An intentional breach of this duty constitutes a tax crime.
In this situation, however, it is often a concern that the managing directors or management board members may be at risk of being subject to investigation for tax crimes on account of the error since discovered. This is particularly the case if, for instance, comparable errors have already occurred in the past, but did not at the time cause problems under criminal tax law. Also conceivable, though, are situations in which the revenue authority, unlike the enterprise, assumes intent.
In such a situation the executives of the enterprise may be able to protect themselves by submitting the necessary late registration in a form that, if need be, e.g. if the revenue authority is not persuaded otherwise, meets the requirements set out by the German Fiscal Code (AO) for a voluntary disclosure giving exemption from punishment after tax evasion (sec. 371 AO) or reckless understatement of tax (sec. 378 (3) AO). The late registration need not contain the words “voluntary disclosure”. The (stricter) requirements of sec. 371 AO provide in particular for:
Should the revenue authority consider the above late registration of bases of assessment to be a voluntary disclosure, this would mean not only that the executives of the enterprise were protected, but also, under certain circumstances, the enterprise itself. In the case of crimes or regulatory offences by executives of an enterprise, the enterprise may be subject to regulatory fines under sec. 30 of the German Regulatory Offences Act (OWiG) that could amount to several million euros.
However, the preclusion clause of sec. 30 (4) sentence 3 OWiG states that the independent assessment of a regulatory fine is precluded if the crime or regulatory offence of the executive cannot be prosecuted. Such a bar to prosecution is given in the case of a successful voluntary disclosure. This requires, however, that all executives concerned submit successful voluntary disclosures.
Successful voluntary disclosures under criminal tax law thus offer not only protection against prosecution for managing directors and management board members, but also protection of the enterprise against the assessment of regulatory fines under the Regulatory Offences Act.
|www.deloitte-tax-news.de||Diese Mandanteninformation enthält ausschließlich allgemeine Informationen, die nicht geeignet sind, den besonderen Umständen eines Einzelfalles gerecht zu werden. Sie hat nicht den Sinn, Grundlage für wirtschaftliche oder sonstige Entscheidungen jedweder Art zu sein. Sie stellt keine Beratung, Auskunft oder ein rechtsverbindliches Angebot dar und ist auch nicht geeignet, eine persönliche Beratung zu ersetzen. Sollte jemand Entscheidungen jedweder Art auf Inhalte dieser Mandanteninformation oder Teile davon stützen, handelt dieser ausschließlich auf eigenes Risiko. Deloitte GmbH übernimmt keinerlei Garantie oder Gewährleistung noch haftet sie in irgendeiner anderen Weise für den Inhalt dieser Mandanteninformation. Aus diesem Grunde empfehlen wir stets, eine persönliche Beratung einzuholen.
This client information exclusively contains general information not suitable for addressing the particular circumstances of any individual case. Its purpose is not to be used as a basis for commercial decisions or decisions of any other kind. This client information does neither constitute any advice nor any legally binding information or offer and shall not be deemed suitable for substituting personal advice under any circumstances. Should you base decisions of any kind on the contents of this client information or extracts therefrom, you act solely at your own risk. Deloitte GmbH will not assume any guarantee nor warranty and will not be liable in any other form for the content of this client information. Therefore, we always recommend to obtain personal advice.