Information sheet § 116 AO for courts and authorities

Federal Ministry of Finance IV A 4 - S 0275/21/10002 :001

1. Basic information
   
   Courts and federal, state and local public authorities may have information that indicates a tax offense within the meaning of Section 369 et seq. AO, e.g. tax evasion, tax theft or a breach of the law, but of which the federal and state tax authorities1 are not yet aware. To ensure prosecution, but also to ensure uniform tax assessment, Section 116 (1) sentence 1 AO contains a provision that obliges courts and other authorities to act proactively: Factual circumstances that allow conclusions to be drawn about a tax offense must be reported to the tax authority. Municipal authorities, immigration authorities, social security institutions, employment agencies, trade offices, land registry offices, constitutional protection offices, the Federal Financial Supervisory Authority (BaFin)2 and all courts of all jurisdictions are obliged to provide information.
   
   If a tax offense is suspected, the tax authority responsible under Section 386 (1) sentence 1 or (2) AO investigates the facts of the case. Prompt notification of the facts is of great importance so that the tax authority can decide at an early stage whether there is an initial suspicion of a tax offense in order to initiate preliminary proceedings against the person concerned if necessary and, for example, to enable a detention of assets to be obtained at an early stage to secure the confiscation of the value.
   
   Notifications pursuant to Section 116 (1) sentence 1 of the German Fiscal Code (AO) are made by authorities that do not take their own criminal proceedings measures using form "010158 - Notification pursuant to Section 116 of the German Fiscal Code (AO)" (see section 6). Authorities that can take their own criminal procedural measures use the form in cases in which there is no initial suspicion of criminal proceedings. Criminal complaints do not require the use of the aforementioned form 010158
   
   
2. Facts that must be reported
   
   Facts that must be reported are perceived circumstances from the present or the past that are accessible as evidence and indicate a tax offense. There does not have to be a suspicion of a tax offense, i.e. "sufficient factual indications" in the sense of an initial suspicion under criminal procedure. Investigations by the notifying bodies as to whether there could actually be an initial suspicion of a tax offense are not required. Mere expressions of opinion, value judgments, vague assumptions, conjectures, unfounded hypotheses or unsubstantiated rumors are not sufficient.
   
   Only facts that were learned in the course of employment are covered by the duty of disclosure. Privately obtained knowledge does not justify a duty of disclosure.
   
   As soon as facts indicate a tax offense, the specific facts must be reported. If information has been provided in this regard, particularly in the case of ongoing matters, the reporting obligation has been satisfied and no ongoing information is required, provided that no new facts - not previously reported - become known
   
   
3. Examples
   
   The following is a list of facts that may constitute indications of a tax offense and must therefore be reported as a rule. The explanations are not exhaustive
   
   
   • Indications that, possibly also in combination, suggest a tax offense
     
     
     • unusual cash transactions
     • Serious accounting deficiencies, in particular conspicuous absence of otherwise generally accepted documents
     • Serious breaches of record-keeping and retention obligations
     • unbooked goods receipts and goods issues
     • Backdating and pre-dating of contracts
     • significant discrepancies as a result of samples that cannot be clarified (e.g. mismatch between goods purchased and goods sold)
     • Discrepancies between samples of goods
     • Indications of concealed or misleadingly designated bank accounts (accounts in fictitious or third-party names)
     • concrete suspicions that receipts have been manipulated/falsified
     • Continuously high cash deposits into accounts
     • (Anonymous) reports from third parties relating to tax-relevant matters
     • Transactions that have no benefit of their own without taking tax advantages into account (e.g. payments for consulting services or payments that are obviously not based on an exchange of services in terms of amount or the designated service or delivery, indications of sham transactions)
     • Complex and non-transparent transactions that are suitable for concealing the beneficial owner (e.g. payments to and authorizations to dispose of third-party accounts, use of straw men, e.g. for property purchases or other legal transactions)
     • Cases that may trigger an excise duty or customs debt in the customs administration's area of responsibility and are therefore covered by the notification obligation
       
       
       • Smuggling or illegal trade in goods subject to import duty and/or excise duty
       • Import, export or transit of goods that are subject to prohibitions or restrictions
       • Trade in cigarettes or other tobacco products without a valid tax stamp
       • Production of excisable goods without a permit (e.g. moonshine distillation of alcohol, purification of denatured alcohol, production of coffee in private households for passing on to third parties, production of water pipe tobacco from raw tobacco)
       • Fuel oil dieselization (suspected energy tax evasion)
         
         
   • In the area of criminal jurisdiction, all cases in which criminal offenses have been committed on a commercial basis to generate ongoing income (e.g. drug trafficking, receiving stolen goods, fraud) are also generally relevant for tax purposes. This follows from the fact that, in accordance with Section 40 AO, it is irrelevant for taxation purposes whether a behavior violates a legal requirement or prohibition or offends common decency. Income from criminal offenses of any kind is therefore taxable. In general experience, however, such income is not declared to the tax authorities
     
     
   • In the area of labor and civil jurisdiction, the following facts in particular may be tax-relevant and are covered by the reporting obligation
     
     
     • In labor court proceedings, it becomes known that undeclared wages have been paid.
     • In civil proceedings, it becomes known that the actual payment made for a property purchase is higher than the purchase price recorded in the notarized contract.
     • A property is sold at a conspicuously low purchase price.
     • In the case of so-called "without invoice" transactions, there is a suspicion that business income is not being taxed.
     • In the context of disputes over payment claims or the rectification of defects, it becomes known that the entrepreneur providing the services has not registered his business with the trade office.
     • In estate disputes, hidden assets are revealed to the tax authorities (e.g. deposits abroad).
     • In the course of inheritance disputes, it becomes known that the deceased had made substantial gifts prior to the inheritance, which must be taken into account when determining inheritance tax.
     • In disputes over wages, it becomes apparent that services were not carried out in the professionally used or rented residential units as billed, but in private premises.
     • In maintenance disputes or divorce proceedings, it becomes known that the maintenance debtor has more assets/income than previously declared (e.g. hidden foreign accounts, undeclared income, other concealed assets)
       
       
4. Other notification and disclosure obligations
   
   The following is a list of examples of other notification and disclosure obligations that exist in addition to Section 116 AO
   
   
   • § Section 4 (5) sentence 1 no. 10 sentence 2 EStG
     
     Courts, public prosecutors and administrative authorities have a duty to report facts relating to the provision of benefits that constitute an offence under a criminal law or a law that permits punishment with a fine, in particular
     
     
     • Bribery of voters (Section 108b (1) StGB)
     • Bribery of elected officials (Section 108e para. 2 StGB)
     • Sports betting fraud (Section 265c (2) and (4) StGB)
     • Manipulation of professional sports competitions (Section 265d (2) and (4) StGB)
     • Bribery in business dealings (Section 299 (2) StGB)
     • Granting of advantages (Section 333 StGB) and bribery (Section 334 StGB), possibly in conjunction with Section 335a StGB (granting of advantages and bribery of foreign and international officials)
       These offenses are of particular importance from a tax perspective, as the perpetrators in these cases regularly have sufficient financial resources to pay off their tax debts. In addition, the corresponding expenses may not be taken into account to reduce profits
       
       
   • Ordinance on notifications to the tax authorities by other authorities and public broadcasters (notification ordinance)
     
     The notification ordinance issued on the basis of Section 93a AO obliges authorities within the meaning of Section 6 (1) AO and public broadcasters to send certain notifications to the tax authorities without a request under the conditions specified therein, for example trade licenses and permits
     
     
   • §§Sections 32 para. 3 sentence 2 no.1, 28 para. 4 GwG; Section 32 para. 2 sentence 1 GwG
     
     As part of its statutory mandate, in particular the analysis and forwarding of suspicious activity reports under money laundering law, the Financial Intelligence Unit (FIU) transmits personal data to the competent domestic public authority ex officio or upon request in accordance with Sections 32 para. 3 sentence 2 no. 1, 28 para. 4 GwG, insofar as this is necessary for taxation proceedings, among other things.
     
     If, as part of its operational analysis, the FIU determines that an asset is connected to another criminal offense, it must also immediately forward the result of its analysis and all relevant information to the competent law enforcement authority (e.g. tax investigation authorities) in accordance with Section 32 (2) sentence 1 AMLA
     
     
   • §Section 32 para. 6 sentence 1 GwG
     
     If the public prosecutor's office has initiated criminal proceedings on the basis of facts transmitted by the FIU in accordance with Section 32 para. 2 GwG, it shall notify the competent tax authority of the facts together with the underlying facts if a transaction is identified that could be of significance to the tax authorities for the initiation or execution of taxation and criminal tax proceedings
     
     
   • §Section 6 (1) and (4) sentence 1 no. 4 SchwarzArbG
     
     Pursuant to Section 6 (4) sentence 1 no. 4 SchwarzArbG, the customs authorities must inform the competent tax authority of any indications of violations of tax laws that arise in the performance of their duties under the SchwarzArbG.
     
     Details are contained in the regulation agreed with the state ministries of finance on the principles of cooperation between the Financial Control of Clandestine Employment of the Customs Administration (FKS) and the state tax authorities in accordance with Section 2 (2) sentence 3 SchwarzArbG (Cooperation Regulation on Combating Clandestine Employment). The matters to be communicated are specifically (but not exhaustively) named in the typology paper on the exchange of information, which is attached to the cooperation regulation.
     
     Further information may be communicated if there are indications of violations. This also includes incidental findings, e.g. indications of untaxed income (accounts abroad, large sums of cash, deposits of money into non-company accounts)
     
     
5. Duty of confidentiality, tax secrecy and data protection
   
   According to Section 105 (1) AO, the duty of confidentiality of public authorities or other public bodies does not apply to their duty to provide information and submit documents to the tax authorities. Exceptions to this are, among other things, facts subject to the secrecy of correspondence, post and telecommunications in accordance with Section 116 (2) AO in conjunction with Section 105 (2) AO.
   
   The communications are subject to tax secrecy with the tax authorities (Section 30 AO).
   
   The disclosure or utilization of data subject to tax secrecy by the tax authorities is only permitted under the conditions of Section 30 (4) and (5) AO. Therefore, it is generally not permissible to inform the notifying party of the "additional tax result" obtained as a result of the notification. This does not apply to notifications to BaFin in accordance with Section 8 (2) KWG (criminal tax proceedings against, among others, managers and owners of significant shareholdings of institutions and in the case of offenses committed by all employees of supervised institutions in the course of their duties). In these cases, disclosure is permitted in accordance with Section 30(4)(2) AO.
   
   Further information on data protection can be found on the websites of the BZSt and the state tax authorities
   
   
6. Notification channel
   
   Notifications in accordance with Section 116 (1) sentence 1 AO must be sent to the Federal Central Tax Office (by email to 116AO@bzst.bund.de) or, if known, to the competent tax authority (tax offices, main customs offices) using the attached sample form with the number "010158". The form is available in the Extern: Forms Management System (FMS) (Öffnet in neuem Fenster) of the Federal Tax Administration.
   
   Notifications to the main customs offices should be sent to the competent criminal investigation offices, which decide whether to involve the customs investigation offices. The competent main customs office can be determined using the "office search" at www.zoll.de.
   
   As a rule, it is sufficient to first send copies of the necessary documents and evidence from the file. The person concerned should not be informed, as this could jeopardize the success of the investigation.
   
   Any questions that may arise can be discussed with the competent tax authority before sending a notification - also by telephone.
   
   Information and forms are also available at Extern: www.bzst.de (Öffnet in neuem Fenster)
   
   Status: June 2022