Federal Ministry of Finance IV A 4 - S 0275/21/10002 :001
Courts and authorities of the Federal Government, the Länder and local public administration bodies may have information at their disposal that indicates a tax offence within the meaning of Section 369 et seq. AO, e.g. a tax evasion, tax fencing or a ban offence, but of which federal and state financial 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 take the initiative: Factual circumstances that allow conclusions to be drawn about a tax offense must be reported to the tax authorities. Municipal authorities, foreigners authorities, social security institutions, employment agencies, trade offices, land registry offices, offices for the protection of the constitution, the Federal Financial Supervisory Authority (BaFin)2 and all courts of all jurisdictions are obliged to notify the tax authorities.
In the event of suspicion of a tax offense, the competent tax authority under Section 386 (1) sentence 1 or (2) AO shall investigate 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 in order, for example, to make it possible to obtain a property detention order at an early stage in order to secure the recovery of the value of the assets.
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 procedural measures using form "010158 - Notification pursuant to Section 116 of the German Fiscal Code (AO)" (cf. item 6). Authorities that can take their own criminal procedural measures use the form in cases to be notified in which there is no initial suspicion of criminal proceedings. Criminal reports do not require the use of the aforementioned form 010158.
- Factssubject to notification
Facts subject to notification are perceived circumstances from the present or the past that are accessible to evidence and indicate a tax offense. A suspicion of a tax offense, i.e. "sufficient factual indications" in the sense of an initial suspicion under criminal procedure, does not have to exist. It is not necessary for the informing authorities to investigate whether there might actually be an initial suspicion of a tax offense. Mere expressions of opinion, value judgments, vague assumptions, conjectures, unfounded hypotheses or unsubstantiated rumors, on the other hand, are not sufficient.
Only facts that were learned in the course of duty are covered by the duty to report. Knowledge obtained privately does not constitute a duty to report.
As soon as facts indicate a tax offense, the specific facts must be reported. If, in particular in the case of permanent facts, information has been provided under these aspects, the obligation to report has been fulfilled and there is no need for continuous information, provided that no new - previously unreported - facts become known.
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.
- Evidence that, possibly also in their interaction, suggest a tax offense:
- unusual cash transactions
- Serious accounting deficiencies, in particular conspicuous absence of otherwise generally accepted supporting documents
- Serious violations of record-keeping and storage obligations
- unrecorded goods receipts and goods issues
- Forward and backdating of contracts
- major discrepancies as a result of sampling which cannot be clarified (e.g. disproportion between the purchase and sale of goods)
- Discrepancies between samples of goods
- Indications of concealed or misleadingly designated bank accounts (accounts in a fictitious or foreign name)
- concrete suspicion that receipts have been manipulated/falsified
- Continuously high cash deposits to accounts
- (anonymous) reports from third parties concerning tax-relevant matters
- Transactions that do not show their own benefit when tax advantages are not taken into account (e.g. payments for consulting services or payments that are obviously not based on an exchange of services in terms of their amount or the service or delivery described, indications of fictitious 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. in connection with the acquisition of real estate or other legal transactions)
- Cases that may trigger an excise tax or customs debt in the customs administration's area of responsibility and are therefore covered by the notification requirement:
- Smuggling or illegal trade in goods subject to import duties and/or excise duties
- Import, export or transit of goods subject to prohibitions or restrictions
- Trade in cigarettes or other tobacco products without a valid tax stamp
- Manufacture of excisable goods without a permit (e.g., moonshining of alcohol, purification of denatured alcohol, manufacture of coffee in private homes for transfer to third parties, manufacture of hookah tobacco from raw tobacco)
- Fuel oil dieselization (suspected energy tax evasion)
- In the area of criminal jurisdiction, moreover, as a rule all circumstances have tax relevance in which criminal acts have been committed commercially for the purpose of generating continuous income (e.g. drug trafficking, receiving stolen goods, fraud). This follows from the fact that, pursuant to Section 40 of the German Fiscal Code (AO), it is irrelevant for taxation purposes whether conduct violates a statutory requirement or prohibition or offends against public morals. Thus, revenues from criminal acts of any kind are subject to taxation. However, according to general experience, such income is not declared to the tax authorities.
- In the area of labor and civil jurisdiction, the following facts in particular may have tax relevance and are covered by the notification obligation:
- In a labor court case, it becomes known that black wages were paid.
- In a civil lawsuit, it becomes known that the payment actually made for a land 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 off-bill transactions, there is a suspicion that business income is not being taxed.
- In the course of disputes over payment claims or the rectification of defects, it becomes known that the contractor has not registered his business with the Trade Licensing Office.
- In estate disputes, hidden assets are revealed to the tax authorities (e.g. custody accounts abroad).
- In the course of inheritance disputes, it becomes known that the decedent made substantial gifts prior to the inheritance, which must be taken into account when determining the inheritance tax.
- In the case of disputes over wages for work, it becomes apparent that services were not performed in the professionally used or rented residential units, but in private rooms.
- In maintenance disputes or divorce proceedings, it becomes known that the person obliged to pay maintenance has more assets/income than he or she has previously declared (e.g. hidden foreign accounts, undeclared income, other concealed assets).
- Evidence that, possibly also in their interaction, suggest a tax offense:
- Other notification and reporting obligations
The following are examples of other notification and reporting obligations that exist in addition to Section 116 AO:
- § Section 4 (5) Sentence 1 No. 10 Sentence 2 EStG
Courts, public prosecutors' offices and administrative authorities have a duty to report facts relating to the granting of benefits that constitutes a criminal act or a law that permits punishment with a fine, in particular:
- Bribery of voters (Section 108b (1) StGB)
- Bribery of elected officials (Section 108e (2) StGB)
- Sports betting fraud (Section 265c (2) and (4) StGB)
- Manipulation of professional sports competitions (Section 265d (2) and (4) StGB)
- Bribery in commercial transactions (Section 299 (2) StGB)
- Granting of advantages (Section 333 of the Criminal Code) and bribery (Section 334 of the Criminal Code), possibly in conjunction with Section 335a of the Criminal Code (granting of advantages and bribery of foreign and international officials)
These offenses are of particular importance from a tax point of view, as the perpetrators in these cases regularly also have sufficient financial resources to repay the tax debts. In addition, 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 of the German Fiscal Code (AO) obliges authorities within the meaning of Section 6 (1) of the German Fiscal Code (AO) and public broadcasters to send certain notifications to the tax authorities without a request under the conditions specified therein, for example, permits and licenses under trade law.
- §§Sections 32 (3) Sentence 2 No. 1, 28 (4) AMLA; Section 32 (2) Sentence 1 AMLA
Within the scope of its legal mandate, in particular the analysis and forwarding of suspicious activity reports under money laundering law, the Central Financial Transaction Investigation Unit (FIU) transmits personal data to the competent domestic public authority ex officio or upon request pursuant to Sections 32 (3) Sentence 2 No. 1, 28 (4) AMLA, insofar as this is necessary for taxation proceedings, among other things.
If the FIU determines in the course of its operational analysis that an asset is related to another criminal offense, it must also immediately transmit the result of its analysis as well as all relevant information pursuant to Section 32 (2) Sentence 1 AMLA to the competent law enforcement agency (e.g. tax investigation agency).
- §Section 32 (6) Sentence 1 AMLA
If the public prosecutor's office has initiated criminal proceedings on the basis of facts transmitted by the FIU pursuant to Section 32 (2) AMLA, 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 conduct of taxation and criminal tax proceedings.
- §Section 6 (1) and (4) Sentence 1 No. 4 SchwarzArbG
According 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 during 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 (Finanzkontrolle Schwarzarbeit der Zollverwaltung, FKS) and the state tax authorities pursuant to Section 2 (2) sentence 3 of the Clandestine Employment Act (Zusammenarbeitsregelung Schwarzarbeitsbekämpfung). The facts to be communicated are specifically (but not conclusively) named in the typology paper on the exchange of information prepared as an annex to the cooperation regulation.
Further information can be communicated if there are corresponding indications of violations. This also includes chance findings, e.g. indications of untaxed income (accounts abroad, large sums of cash, deposits of money in non-company accounts).
- § Section 4 (5) Sentence 1 No. 10 Sentence 2 EStG
- Duty of Confidentiality, Tax Secrecy and Data Protection
According to Section 105 (1) AO, the duty of public authorities or other public bodies to maintain confidentiality does not apply to their duty to provide information and to submit documents to the tax authorities. Among other things, facts subject to the secrecy of correspondence, mail and telecommunications are exempt pursuant to Section 116 (2) AO in conjunction with Section 105 (2) AO.
The communications are subject to tax secrecy at 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 about the tax "additional result" obtained on the basis of his notification. This does not apply to disclosures to BaFin pursuant to Section 8 (2) KWG (criminal tax proceedings against, among others, managing directors and owners of significant shareholdings of institutions as well as in the case of offenses committed on duty by all employees of supervised institutions). In these cases, disclosure is permissible pursuant to Section 30 (4) no. 2 AO.
Further information on data protection can be found on the websites of the BZSt and the state tax authorities.
The notifications pursuant to Section 116 (1) sentence 1 AO must be sent to the Federal Central Tax Office (by e-mail to 116AO@bzst.bund.de) or, if known, to the competent tax authority (tax offices, main customs offices) using the sample form with the number "010158" attached as an annex. The form is available in the Form Management System (FMS) of the Federal Tax Administration.
Notifications to the main customs offices should be made to the competent criminal investigation offices, which decide on the involvement of the customs investigation offices. The main customs office responsible in each case can be determined by means of the "Dienststellensuche" on 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 a notification is sent - also by telephone.
Information and forms are also available at www.bzst.de.
As of June 2022