German Government Denies Tax Amnesty Is Failing

by Ulrika Lomas, Tax-News.com, Brussels

24 February 2004

The German Finance Ministry has denied a claim by the head of the German tax union on Saturday that revenues collected from the investment amnesty have so far been very disappointing, and will likely fall way short of the government’s intended target.

According to a local media report, tax union chief Dieter Ondracek suggested that the amnesty has raised a mere EUR50 million in its first six weeks of operation. He noted that if this rate continued, the government would earn just EUR500 million in revenues, far short of the EUR5 billion hoped for.

The German Finance Ministry was quick to denounce Ondracek’s claim however, and a spokesman for the ministry responded by explaining that no official figures for the amnesty are available, and that statistics will not be published until the end of the first quarter.

The amnesty scheme went into effect in January of this year, and imposes a 25% tax rate on funds which were originally sent abroad to escape high rates of domestic tax. The government has argued that this is a much lower effective rate than would have been paid by investors if the funds had been declared. Taxpayers are also permitted to keep their funds offshore. However, after March 2005, the penalty increases to 35%.

The federal government plans to raise EUR2 billion from the amnesty, with the remainder shared between regional and local authorities.

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