German Taxpayers To Come Under Closer Scrutiny

by Ulrika Lomas, Tax-News.com, Brussels

04 April 2005

German taxpayers are coming under increasing scrutiny after a new ‘Law for Tax Honesty’ went into effect last Friday, backed up by a new computer system originally designed to fight money laundering and terrorism.

The new system, administered by the country’s financial regulator Bafin, enables investigators to discover what type of domestic bank accounts are held by individual Germans and tally this information against an individual’s tax return to ascertain whether the individual under scrutiny has paid the correct amount of tax.

Investigators do not need to prove their suspicions before accessing taxpayer information held on the system and, understandably, the new law has raised serious concerns over privacy and taxpayer rights.

"Now it’s like Google,” noted Thomas Schluter, a spokesman for the Federal Association of German Banks, according to the International Herald Tribune.

“They put in a name and date of birth, and out comes the information,” he explained.

The computer system has evolved from a law passed in the wake of the September 11 attacks in the United States, allowing financial regulators to access data on accounts holding cash, bonds and stocks. While it is unclear how successful this has been in tracking the financial activity of terrorists and other criminal elements, the IHT reported that the various agencies which have used the system made 39,000 enquires during 2004 alone.

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