Extension of the Deadline for the Collection of Tax Benefits - Tax Compliance Management as a Protective Shield

In addition to the regulation of fiscal benefits, the second Coronavirus Tax Relief Act also contains new regulations with reference to fiscal offences, which once again illustrate the necessity of effective tax compliance management.

By adding the new section 375a to the German Fiscal Code (AO), the expiration of a claim from the fiscal obligation through limitation pursuant to section 47 AO does not prevent the confiscation of unlawfully obtained proceeds of crime pursuant to section 73 to 73c of the German Criminal Code (StGB).

This substantial new regulation may already apply if, in the context of a (tax) audit, rather considerable tax-relevant errors which happened over a longer period are determined. It is not uncommon in such cases for tax authorities and investigating authorities to assume at least conditional intent and thus the existence of tax evasion.

In this context, authorities regularly ask about the internal organisation and the existence of controls, i.e. an ICS or tax compliance management system. The existence of such systems can, according to the German Fiscal Code's application decree on section 153 no. 2.6 sentence 6 AEAO, be an indication in individual cases that can speak against the existence of intent and recklessness.

Insofar as effective tax compliance measures lead to the negation of intent and thus to the negation of tax evasion (section 370 AEAO), this also precludes confiscation under section 73 et seq. StGB.

With regard to the amendments passed by the legislator with reference to criminal tax law, one might ask what these have to do with the coronavirus. The answer is simple: nothing.

Still, the amendments lead to significant tightening of criminal tax law, which once again illustrates the necessity and significance of effective tax compliance management. Tax compliance measures taken today may still pay off in the distant future ‑ especially in view of the newly regulated collection possibilities ‑ if the state's tax claims that are established today are already statute-barred under tax law. Here it is important that the tax compliance measures are documented in a then still comprehensible manner.

Timo Handel