Plan A in criminal tax law: German tax investigation focuses on Turkey

First Switzerland and Liechtenstein – now Turkey. Starting December 2020, Turkey will be under the scope of German tax investigators! In cooperation with Schäfer.Recht, Plan A – Kanzlei für Strafrecht is making sure companies and entrepreneurs with a Turkish connection understand the new situation and are ready to take necessary and urgent action.

Turkey is about to take part in the automatic exchange of information to combat cross-border tax evasion. Starting in December 2020, information about accounts in Turkey will be transmitted to German tax authorities.

Important: An international treaty with serious consequences

In 2014, many countries agreed on the so-called “Agreement on the Automatic Exchange of Information on Financial Accounts between International Tax Authorities”. On this basis, the Federal Republic of Germany has been exchanging data with over 50 countries since 2017. From 31st December 2020 on, Turkey will also participate in this data exchange.

The reason for the exchange of information is the effective combating of tax evasion. Information is exchanged on account holders, account balances and investment income such as interest, dividends and capital gains.

Note: Turkish banks report data to German tax authorities

From December 2020, Turkish financial institutions (banks and insurance companies) will be legally obliged to transfer the data to be exchanged to an office in Turkey. This office sends the tax-relevant data to the German Federal Central Tax Office (BZSt).

The information transmitted by Turkey will be evaluated by the German tax authorities. This evaluation will lead to many tax proceedings and criminal tax proceedings.

Personal scope: Who is affected?

All persons and corporations with residence, habitual residence or office in Germany are affected if they have capital assets or insurance policies with Turkish financial institutions. These persons can expect to receive mail from the tax office from January 2021 onwards. Or they can even expect a visit from the tax investigation department.

Because: Those who have not yet declared capital assets in Turkey in their German tax declaration are potential perpetrators of tax evasion in the view of the German tax authorities.

Possible consequences: What is the threat to those affected?

Those affected are threatened with investigations by the tax investigation department. With unpleasant questions: What is the capital stock of the money invested in Turkey? How high was the profit of the investment in each case? Where did the capital come from? And so on …

If the taxpayer does not provide any information on this, the tax office may estimate the investment income. Alternatively, they may do the math themselves: by conducting searches and seizing evidence.

At the end of each investigation, the following applies: If capital gains were not mentioned in the tax declaration and the taxpayer at least accepted that taxes would be reduced, the person or business has committed tax evasion. The consequences: a fine or imprisonment for up to ten years! In addition, there is the threat of being banned from doing business and other painful “side effects”.

Plan A: Timely voluntary disclosure as a way out

The way out is through the so-called voluntary disclosure. In German tax law there is the possibility of avoiding a penalty: If the taxpayer discloses all facts of the tax evasion of the last ten years and pays the taxes and interest due (and, if applicable, a penalty surcharge), he or she can escape criminal sanctions (such as a prison sentence).

Important: The voluntary declaration is only effective – and thus only leads to exemption from punishment – if it is complete. An ineffective voluntary disclosure, on the other hand, can lead to imprisonment. It is advisable to urgently seek expert advice on this.

Of course, we will advise and understand you in both German, English, and Turkish.

The lawyers of Plan A in cooperation with Schäfer.Rechtare always available to answer your questions. Lawyer Stefan Schäfer is a specialist in criminal tax law. In particular, before becoming a lawyer, he himself led a tax investigation in cooperation with Plan A.

Contact person at Plan A:

• Lawyer Dr. Ingo Bott
• Lawyer Stefan Schäfer
• Lawyer Murat Denizli

Dr. Ingo Bott
Rechtsanwalt / Partner

Plan A – Criminal law firm

Stefan Schäfer
Rechtsanwalt / Of Counsel

Plan A – Criminal law firm

Murat Denizli
Rechtsanwalt / Associate

Plan A – Criminal law firm