Tax evasion: North Rhine-Westphalia purchases one terabyte of data from offshore tax havens

The State Office for Combating Financial Crime of North Rhine-Westphalia (Landesamt zur Bekämpfung der Finanzkriminalität Nordrhein Westfalen, "LBF NRW") has purchased one terabyte of data from a whistleblower containing customer information from offshore service providers. According to the LBF NRW press release , the data relates to service providers with offices in the United Arab Emirates, the Cayman Islands, Hong Kong, Mauritius, Panama, Singapore, and Cyprus.

Information on shell companies in tax havens

Offshore service providers enable their customers to set up foreign companies, known as shell companies, in low-tax areas (tax havens). The intermediary role of the companies and, in some cases, straw men serves to hide money from the German tax authorities. This arrangement is often used to evade taxes or to conceal assets obtained through criminal activities.

The LBF NRW has more than one terabyte of data on foreign companies around the world and the beneficial owners behind them. This also includes taxpayers in Germany. Once the data has been processed, it will also be made available to authorities in other federal states and foreign partners.

Criminal prosecution and searches

It is to be expected that numerous taxpayers named in the data will be subject to both tax and criminal investigations; searches are also likely, as in similar cases in the past. Tax evasion has not been a trivial offense for years and can lead to heavy fines or prison sentences. According to the German Federal Supreme Court, tax evasion involving an amount of more than EUR 1 million should generally result in a prison sentence without parole. In most cases, hopes of the statute of limitations expiring are unfounded. Tax evasion in particularly serious cases does not expire before 15 years have elapsed. The courts consider cases involving amounts of EUR 50,000 or more to be particularly serious.

Voluntary disclosure exempting from punishment possible

As long as the tax authorities have not yet discovered a case, i.e., have not yet evaluated the data, it is still possible in individual cases to submit a voluntary self-disclosure that exempts from punishment. 

The decisive factor is now to disclose the facts in full to the authorities in a voluntary self-disclosure or, if not all documents are available, to first disclose the taxable income to the authorities by means of an estimate.

Whether voluntary self-disclosure exempts the taxpayer from punishment depends on whether the authorities discovered the offense first or whether the taxpayer preempted the discovery by making voluntary disclosure. Even if the offense has already been discovered, cooperative and complete voluntary disclosure and payment of the evaded taxes will in any case result in a more lenient punishment. 

Action is the order of the day

Our team of criminal defense attorneys, specialists in criminal tax law, and tax advisors will support you — even at short notice — in making your decision and represent you before the tax and law enforcement authorities.

Dr. Jochen Pörtge
Martin Seevers
Volker Küpper