November 21, 2018 /
Due to VAT declarations that were not submitted or were submitted late, the Office for Fines and Criminal Matters (BuStra) at the tax office initiated criminal tax proceedings against an entrepreneur in connection with an external audit. As a result, the local court issued a penalty order for VAT evasion, against which the entrepreneur did not lodge an appeal.
Entrepreneur found guilty
In this penalty order, only the evaded VAT (without interest) was stated, the entrepreneur was warned and a suspended fine for two years was reserved.
The warning with reservation of punishment is a special form of sanction that can only be considered in the case of a fine of up to 180 daily rates under certain conditions. The penalty is reserved in the event that the offender does not prove himself. However, he must be found guilty in the judgment.
Three years later, the entrepreneur filed an application to open insolvency proceedings against her assets and for residual debt discharge. Residual debt discharge is only possible in the case of so-called consumer insolvency. This gives an insolvent natural person the opportunity to become debt-free after a period of good conduct. In Germany, this phase generally lasts six years from the time insolvency proceedings are opened, although it can also be shortened to three or five years under certain circumstances.
Argumentation of the plaintiff incorrect
Debts based on tortious claims are excluded from residual debt discharge in accordance with Section 302 InsO and therefore also all liabilities based on tax offenses for which the debtor has been convicted by a final judgment, as in the present case. The entrepreneur wrongly argued that in the case of a conviction with reservation of punishment, there is no conviction but merely a warning.
It was also questionable whether the interest accrued in the case of tax evasion should also be excluded from the discharge of residual debt.
In my opinion, the Federal Fiscal Court incorrectly affirms this with the argument that the interest also belongs to the liabilities from a tax debt relationship and is therefore covered by the wording of Section 302 InsO.