BKA analyses Panama Papers - Voluntary disclosure for tax evasion

It has been known since the beginning of July that the Bundeskriminalamt (BKA), Germany"s Federal Criminal Police Office, has purchased what are referred to as the "Panama Papers" and is set to analyse the controversial information they contain. Those who are concerned they may have evaded taxes can still submit a voluntary declaration.

The so-called Panama Papers caused a sensation last spring. These supposedly concern what are sometimes called shell or letterbox companies, money laundering and tax evasion. According to media reports, the Bundeskriminalamt has since purchased the information and will be analysing this together with the fiscal authorities for the German state of Hesse with the intention of looking into criminal and tax offences.

We at the commercial law firm GRP Rainer Rechtsanw?lte note that it is not as a matter of principle illegal to be involved or have a share in an offshore firm. Provided tax has been properly paid on the profits generated this is legal. Notwithstanding this, if it is suspected that the German exchequer has been cheated with the help of shell companies, those concerned should anticipate investigations being opened. It is important to note here that it is not only German but also international tax law that needs to be considered. Anyone who has doubts regarding whether the transactions were all carried out legally can turn to lawyers who are experienced in the field of tax law. They can assess whether submitting a voluntary declaration leading to immunity for tax evasion is possible.

Voluntary disclosure remains the only means of returning to a state of tax compliance and avoiding a conviction for tax evasion. Having said that, the voluntary declaration needs to be submitted on time, i.e. before the offence is discovered, and complete. To this end, all information that is relevant from a tax perspective from the last ten years has to be disclosed to the competent tax office. This not only applies to those whose name or information appears in the Panama Papers but also anybody who has concealed untaxed income from the exchequer in foreign accounts.

The obstacles standing in the way of an effective voluntary declaration are significant, which is why the latter must be prepared thoroughly and in detail. It is virtually impossible for a layperson to comprehend the complex processes involved. For this reason, a voluntary declaration ought not to be prepared on one"s own or with the help of standard templates, as it is easy to make mistakes this way and even minor errors can result in the voluntary declaration being ineffective. Lawyers who are experienced in the field of tax law can examine each case on an individual basis and prepare the voluntary declaration in such a way that it leads to immunity.

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