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German Tax Data Discs Yield EUR1.8bn

by Ulrika Lomas,, Brussels

22 December 2010

The controversial purchase by German tax authorities of stolen tax data discs containing highly confidential banking information of individuals alleged to have accounts held illegally in Liechtenstein and Switzerland has reportedly served to yield in the region of EUR1.8bn for the treasury.

At a cost to the German state of just a few million euros, the decision to purchase the information appears to have proven highly lucrative for the authorities. Indeed, approximately EUR1.6bn was reportedly generated in back payments this year alone, with a further EUR200m expected next year. Experts have also emphasized the long-term benefits of the government’s decision, convinced that there has been a change in attitude as regards tax declarations and payments.

The purchase of the tax data discs by the country’s authorities lead to a wave of voluntary disclosures throughout Germany from individuals fearing prosecution. Although it was initially unclear as to whether or not the purchase was legal, Germany’s Federal Constitutional Court finally permitted the use of the tax information contained on data discs for criminal prosecutions at the beginning of the month.

The court ruled that information regarding alleged tax evaders, contained on discs provided by informants, may indeed be used during criminal investigations, irrespective of whether or not the original means by which the data was obtained was deemed to be lawful.

Determined to clamp down on tax evasion and money laundering in Germany, the German Finance Ministry also recently announced details of a draft new law designed to toughen existing rules on voluntary disclosure.

According to the finance ministry’s statement, in future impunity from prosecution will only be granted provided that information on all assets qualifying for tax is “completely and accurately” given during the voluntary disclosure. As a result, individuals providing only “piecemeal” information will not be granted immunity.

The timeframe for submitting voluntary disclosures is also to be amended under the new rules, the ministry pointed out. Currently, individuals will still avoid prosecution if their voluntary disclosure is submitted to the German tax authorities at the beginning of an investigation. In future, individuals will only be granted immunity if the voluntary disclosure is submitted prior to the issue of a written notice.

TAGS: individuals | court | tax | tax avoidance | law | banking | Liechtenstein | Germany | Switzerland

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