The Challenge of Tax Audits for Tax Advisors and Clients

In 2021, tax offices across Germany concluded a total of 49,765 criminal proceedings through their fines and criminal investigations units. This shows that tax firms are increasingly encountering tax investigations. This article examines the basics of tax investigations and provides important guidance on how to handle this exceptional situation.

Search Warrant as the Basis for a Tax Investigation

A tax investigation may be conducted on the basis of a search warrant issued either under Section 102 of the Code of Criminal Procedure (against the accused) or under Section 103 of the Code of Criminal Procedure (against other persons, such as the accused’s tax advisor). In exceptional cases, such as in cases of “imminent danger,” a search may even be conducted without a judicial order.

Rights of tax investigators and access rights

Tax investigators have significant rights, including the right to initial access, provisional arrest, questioning the suspect, hearing witnesses, and conducting searches, seizures, and telecommunications surveillance. In principle, the home is “inviolable” (pursuant to Art. 13(1) of the German Basic Law), but access to the premises may be compelled if this is consistent with the principle of proportionality. The accused may be present during the search.

Required grounds for suspicion

The search warrant against the accused must not be more than six months old and must be based on sufficient grounds for suspicion. The items that may be searched for must be clearly defined and must not be subject to a prohibition on seizure.

How to Respond to a Tax Investigation

When tax investigators arrive at the door, a search warrant usually serves as the basis for their visit. In this emotionally charged and exceptional situation, it is important that the client remains calm and does not make any serious mistakes. The search warrant should be carefully reviewed before any documents are voluntarily handed over.

As a rule, warrants are issued against the tax advisor and other parties involved at the same time as the warrant against the accused. The staff at our law firms are prepared for such exceptional situations. Our team of tax advisors in Düsseldorf and Oberhausen is also here to support you in matters related to tax investigations.