Tax advisors warn against tax evasion

Tax evasion is everywhere. Time and again, the news is full of high-profile cases. Millions of euros are at stake, and it’s not uncommon to hear about severe penalties. Yet not every case is the result of deliberate action; rather, it often stems from simple ignorance. As tax advisors in Düsseldorf
and Oberhausen
, we help our clients avoid such missteps. Our auditors in Düsseldorf
also provide support through comprehensive financial statement audits to prevent errors. In this article, we’d like to shed light on the basics of tax evasion and raise your awareness of the issue so you don’t become the next headline.

Tax Evasion: What Exactly Is It?

Tax evasion is committed by anyone who intentionally conceals tax-related facts from the tax authorities or provides incorrect information. Tax evasion requires intent. Tax evasion arises from false or incomplete information in the tax return. Even an attempt to do so is a criminal offense! You can only avoid criminal proceedings if you turn yourself in before the authorities have begun an investigation. Tax evasion should not be confused with “tax minimization” or “tax avoidance.” As tax advisors in Düsseldorf, we are familiar with this topic and will outline the consequences of tax evasion in the next section.

Penalties for Tax Evasion

Tax evasion is a criminal offense. It is therefore punishable by imprisonment for up to five years or a fine. In serious cases, the prison sentence can be as long as 10 years. In addition, you must pay the back taxes that were evaded. The severity of the penalty depends on how much money the government was defrauded of. Tax evasion is often viewed as a minor offense. However, it is fraud, which is punishable by severe penalties. Typically, judges rule as follows:

• Up to 50,000 euros in damages -> Fine + back taxes + 6% interest on the evaded amount
• Damages of 50,000 euros or more -> Possible prison sentence
• Damages of 100,000 euros or more -> Prison sentence with probation
• Damages of 1,000,000 euros or more -> Imprisonment without probation

Last resort: Voluntary disclosure

The topic of taxes can quickly become confusing, especially for inexperienced entrepreneurs. Without professional help, mistakes can easily be made. Therefore, seek advice from your tax advisor in Düsseldorf early on. First, it should be noted that a mistake or “rookie error” is not always immediately punished as tax evasion. If there is no intent on the part of the taxpayer, this may be considered negligent tax evasion. In such cases, “only” fines of up to 50,000 euros are imposed.