Germany's Schäuble Rules Out Tax Amnesty

by Ulrika Lomas, Tax-News.com, Brussels

24 February 2010

In the ongoing debate regarding a possible tax amnesty, Germany’s Finance Minister Wolfgang Schäuble has made clear that there will be no waiver of unpaid taxes for those who illegally hold bank accounts abroad.

Standing firm on his position, Wolfgang Schäuble has categorically ruled out the idea of introducing a new tax amnesty in Germany in order to recover money held abroad. Given that Germany already grants leniency for individuals electing to provide self-declarations, Schäuble considers that a decision to waive the tax liability for evaded taxes would be a step too far.

According to Schäuble, waiving the tax liability as a reward for successful tax evasion simply cannot be justified either to honest taxpayers or for constitutional reasons.

The last tax amnesty in Germany came to an end in March 2005. Although individuals who returned their money to Germany went unpunished, they nevertheless had to pay 35% of the sum to the tax authorities (compared to 25% in 2004).

Given the increased willingness globally for foreign tax authorities to cooperate in tax matters, and also a perceptible change in awareness generally among the population towards a greater understanding of the necessity of paying taxes, Schäuble believes that there is a clear trend away from tax evasion.

Within the coalition government, however, there is growing resentment towards the provision granting more lenient treatment to tax evaders who elect to declare themselves to the tax authorities, and who are subsequently only required to repay taxes and interest. Politicians from both the Christian Social Union and the Free Democratic Party have already called for this highly controversial provision to be abolished.

The Social Democrats are determined to end the stream of self-declarations from 2011, and are eager to present a bill in parliament in March.

In the wake of recent revelations regarding the purchase of a tax data disc from Switzerland, an estimated 3,000 tax evaders have so far come forward voluntarily to the German tax authorities.

Recommended