Tax CDs and Self-Indictment – Self-Indictment in Case of Black Income from Switzerland
The case of FC Bayern’ president Uli Hoeneß leads to the question if and to which extent a self-indictment still is possible and effective if the judicial authorities have already acquired or otherwise received a CD with data of foreign bank accounts.
Legally there is no difference between such a CD and Information in other form, e.g. bank account extracts, denunciation letters etc. A mere technical difference can result from the mass of data which can impede or delay its analysis in comparison with paperwork. On the other hand, information on CD allows a much quicker research in the course of detailed investigation by means of the search function of the usual computer software. In any case the quality of the data made available for the judicial authorities and its idividual significance will be decisive. As for paperwork the following assessments can be made for information on CDs and their relevance with respect to the possibility of a self-indictment:
(i) Barrier Effect
According to the wording of Sec. 371 AO (Tax Code) a self-indictment shall not be possible if the tax authority has announced an audit of the taxpayer, if he has received a letter informing about the start of an Investigation procedure, if a tax official has shown up or if his tax delict is already known to the tax authority and if he knew about that or had to calculate with this. These hindering reasons are the so-called “barrier effect”.
(ii) Discovery of the Tax Delict
By logic one still can follow the idea that a self-indictment shall not be possible in case of an audit, of an Investigation procedure or in case a tax official visits the tax payer. More difficult, however, is however the assessment whether or not in the case of a tax CD the tax delict has already been discovered and whether or not the tax payer knows about that or just ought to. Because both of it is necessary to trigger the barrier effect.
German courts rule quite individually here which is no good basis for legal certainty. According to the leading commentaries, however, the discovery of a tax delict requires more than just knowledge of certain circumstantial evidence or mere indicators, even if such indicators would be sufficient for the opening of an Investigation procedure. Bundesgerichtshof (German Federal Court) postulates that the “likelyhood of a sentence is given”. To fulfil this requirement one will have to demand a written remark in the investigation file as otherwise the exact point of time will not be discernible and thus the principle in dubio pro reo would interfere in favour of the tax payer. The mere discovery of a source of income, however, is not sufficient for a barrier effect nor the detention of documents, which later on could give evidence of a tax delict, nor the mere acceptence of a tax estimate by the tax payer nor finally the inquiry of the tax authorities for specific income. The analysis is deemed to be essential, especially in such way that a comparison with previous tax declarations is possible.
(iii) Knowledge of the Tax Payer
As the knowledge of the tax payer is essential precondition of a criminal act lacks of knowledge or missing proof of knowledge result in the impunity of the tax payer. The burden of proof of the tax payer’s knowledge has to be borne by the tax authority, here. There is no deemed knowledge in such case.
(iv) Application mutatis mutandis on the Case of a Tax CD
As a consequence of the aforesaid principles a discovery of a tax delict is not given if the tax payer is simply registred on the CD. Neither is sufficient that the CD shows a bank account unknown to the tax authorities with several transfers of money. Especially, this will not be sufficient if one cannot see that this transfer is linked to taxable income, e.g. speculative Transactions (only denomination of certain amounts for stock deals without any further details; the tax payer can check the extent of booking Information with his Swiss bank). In practice, exactly this point will be an obstacle for a barrier effect. In addition, a barrier effect can only occur, if the tax payer hat knowledge of the discovery or had to expect the discovery. As a tax CD in many cases will not be sufficient to assume a discovery of a tax delict a tax payer will not have to expect a discovery either.
The facts above show that the registration of a tax payer’s non a tax CD in many cases, depending individually on the source of income, will not be sufficient for a barrier effect and that in part there is no likelyhood of an investigation procedure at all and that in most cases a self-indictment will remain possible.
In each case details should be clarified and discussed together with a competent tax lawyer before taking action in the one or the other direction.