July 26, 2021 /
Deliberately not declaring individual items of income in your tax return may be tempting for a short time, but the risk is not worth it. This is because in most cases the tax office notices the untaxed money, the so-called “black money”, and subsequently initiates a criminal investigation under tax law, which can lead to severe fines or even imprisonment.
You can find out here what reasons there are for such investigation proceedings and how you should act in an emergency if you have already failed to declare income in your tax return.
How does a criminal investigation under tax law come about?
A criminal tax investigation is initiated by the tax office if there is suspicion of tax evasion. This suspicion can arise for various reasons:
Notifications by third parties
In some cases, illicit funds are reported by third parties, both by name and anonymously. If the reports contain conclusive information, the tax office will investigate them. Such reports are typically made by ex-partners, friends, family members and acquaintances (often following disputes), colleagues, customers or employees.
(Unconscious) information from the person concerned
The tax office often receives (usually unknowingly) information about illicit funds from the person concerned. This happens, for example, during a tax audit. Documents such as receipts, bank statements, annual financial statements or similar may contain information relevant to criminal tax law.
Even in the case of an ineffective voluntary disclosure, the tax office has the option of initiating criminal tax investigation proceedings based on the information received.
Own investigations and observations
There is also the possibility that indications of tax evasion are investigated by the tax investigation department itself. Possible scenarios here are
- Account inquiries
- Searches
- Information on the Internet, e.g. on buying and selling portals
- Interrogations
- Evaluation of the press
Exchange of information by the authorities
Tax-related information is also often exchanged between authorities and other institutions, including at international level. If there are indications of a tax offense, this is even required by law. This is the case, for example, with general control notifications, external audits / tax audits, customs investigations or notifications of suspected money laundering.
Trials
Verification refers to all calculation schemes used to check the accounting of the person concerned for undeclared income. This primarily includes mathematical-statistical methods (e.g. time series comparisons, asset growth or monetary transaction calculations), and the examination of expense reports, travel and cash books.
Avoid criminal tax investigation proceedings by booking income retrospectively
You can avoid the risk of black money being discovered by tax investigators by booking the income subsequently. This is normally possible without any problems until the annual financial statements are prepared. The untaxed income is posted as revenue and private withdrawals.
Please note: in the case of major deviations, it can generally be assumed that the tax office will make enquiries. You should therefore prepare a plausible explanation in advance. You should also avoid repeating deviations every year, otherwise there is a risk of a tax audit.