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Voluntary Disclosure - Self-reporting
Self-disclosure offers immunity from prosecution – but only if it's perfect. Complete. Timely. Precise. The Hoeneß case demonstrated that even minor errors can render a self-disclosure ineffective. Then, instead of a dismissal, you risk prosecution. I work with the utmost care and precision. I ensure your self-disclosure is successful the first time. With the experience and diligence this process demands. – Attorney Ibrahim Cakir, Tax Law & Tax Criminal Law & Certified Tax Criminal Law Consultant (DAA)
My Services for Voluntary Disclosure
My range of services for voluntary disclosure:
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Risk assessment and initial evaluation — Is a voluntary disclosure still possible? I examine whether any blocking grounds exist, such as discovery of the offence, ongoing audit proceedings or media reports concerning your bank.
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Full clarification of the facts — Together with you and your tax advisor, I identify all relevant tax types and periods. No partial disclosure, no risk.
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Obtaining documentation — I support you in requesting bank records from domestic and foreign institutions to ensure the figures are accurate.
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Preparation of the voluntary disclosure — Legally sound in formulation, fully documented, submitted within the required timeframe. No rough estimates — only substantiated figures.
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Calculation of back-payments — Evaded taxes, evasion interest (6% per annum), and where applicable surcharges pursuant to Section 398a AO for amounts exceeding €25,000.
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Negotiations with the tax office — Support throughout the proceedings through to termination, clarification of queries, defense against excessive demands.
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Advisory for civil servants — Particular risks arising from notification to the employing authority, strategy for disciplinary proceedings.
What Is a Voluntary Disclosure?
The voluntary disclosure for exemption from punishment pursuant to Section 371 AO is the only path back to tax compliance. The legislator grants taxpayers the opportunity to correct past tax evasion retrospectively and thereby obtain exemption from criminal punishment. The rationale is fiscal: the state wishes to gain access to previously concealed sources of tax revenue. However, this opportunity comes at a price: voluntary disclosure leaves no room for error.
The Completeness Requirement
The Federal Court of Justice has held consistently: a voluntary disclosure must be complete. The principle of a clean slate applies — BGH, DStR 2010, 1133. The taxpayer must correct all incorrect statements, supplement all incomplete statements and submit all omitted returns in full, covering all non-statute-barred tax offences of a given tax type.
A partial voluntary disclosure — disclosing matters piecemeal — renders the entire disclosure ineffective. Those who make only selective corrections obtain no exemption from punishment. Moreover, even a deviation of more than 5% from the actual evasion amount can render the disclosure ineffective — BGH, NZWiSt 2012, 117.
Back-Payment as a Condition
Exemption from punishment is subject to a resolutory condition: the taxpayer must pay the evaded taxes within the prescribed period — including evasion interest pursuant to Section 235 AO at 6% per year. Where the evasion amount exceeds €25,000 per offence, an additional surcharge pursuant to Section 398a AO applies, calculated by reference to the nominal evasion amount. Exemption from punishment only takes final effect once all amounts have been paid.
Self-disclosure – risks and pitfalls
Voluntary disclosure is a powerful instrument — but it can turn against you if it is not perfectly prepared. The following risks lead to failure in practice time and again.
Blocking Ground: Discovery of the Offence — When It Is Already Too Late
A voluntary disclosure is blocked where the offence has already been discovered and the offender knew this or, on a reasonable assessment of the circumstances, ought to have anticipated it — Section 371(2) No. 2 AO. The courts apply a strict standard here: even unspecific knowledge of the purchase of so-called "tax CDs" can trigger the blocking effect. The Local Court of Kiel held — DStR 2015, 897 — that anyone who learns from media reports that German authorities have purchased data from their bank must reckon with discovery. The subjective hope of "getting away with it again" affords no protection.
The Higher Regional Court of Schleswig-Holstein confirmed this strict approach — NZWiSt 2016, 153: as soon as media reports of data purchases at a particular bank emerge, the window of opportunity is closed for customers of that bank.
Consequence: do not wait for press reports. As soon as rumours of data leaks or purchases begin to circulate, you must act immediately. Proactive action is the only protection.
The "Staged Voluntary Disclosure" — A Dangerous Strategy
Many clients do not have all their documents to hand and wish initially merely to "announce" that they intend to file a voluntary disclosure, with the specific figures to follow later. This strategy is highly dangerous.
The Tax Court of Düsseldorf held — judgment of 3 December 2007 — that a mere announcement or a "rough estimate" without a factual basis does not suspend the limitation period. The information provided must be sufficiently specific that the tax office can issue the assessment without extensive further enquiry.
Those who initially provide vague figures and later provide specifics risk the assessment limitation period expiring in the interim — or the tax investigation authority commencing its own investigation, which triggers a further suspension of the limitation period pursuant to Section 171(5) AO — BFH, DStRE 2018, 1451.
Consequence: the first stage must already contain substantiated estimates. "We will be in touch shortly" is not sufficient.
The "Panic Estimate" — Too Much Is Also Wrong
A common error: out of fear of discovery, clients deliberately overestimate their income in order to be "on the safe side." The logic runs: better to declare too much than too little, so that the voluntary disclosure is definitely effective. This strategy can prove costly.
The Tax Court of Hamburg held — judgment of 7 February 2013 — that those who overestimate their income "at random" are frequently unable to correct the resulting tax assessment later, even where they have overpaid. The court treated this as "gross negligence" within the meaning of Section 173 AO.
The Tax Court of Nuremberg confirmed — judgment of 12 February 2015 — that those who submit estimates without demonstrably having made efforts to obtain the actual documents bear the risk of a permanently excessive tax burden.
Consequence: obtain all available documents before submitting the voluntary disclosure. Where estimates are unavoidable, they must be substantiated and documented — no arbitrary "safety additions."
The 5% Threshold — No Margin for Error
The Federal Court of Justice held — NZWiSt 2012, 117 — that a voluntary disclosure is ineffective where the amounts subsequently declared deviate by more than 5% from the actual evasion amount. Only minor deviations below this threshold can be harmless — provided there is no intent.
Consequence: the figures must be accurate. A voluntary disclosure submitted "on suspicion" with rough estimates carries the risk of ineffectiveness.
The Truth Requirement — Falsehoods Do Not Lead to Exemption from Punishment
The Federal Court of Justice clarified — judgment of 2 December 2008 — that a voluntary disclosure must be truthful. Those who declare fictitious turnover — for example to conceal illegal business activities — do not obtain exemption from punishment.
In the case decided, the individual had registered a fictitious business and submitted falsified VAT returns in order to conceal the operation of a brothel. The court held: replacing one lie with another is not a return to tax compliance.
Consequence: even where the source of income is illegal or morally questionable — the tax information provided must correspond to the facts.
Special Case: Civil Servants — No Protection From the Employing Authority
Civil servants must be aware: tax secrecy does not protect them from notification to their employing authority. Pursuant to Section 30(4) No. 5 AO, the passing of data from a voluntary disclosure to the disciplinary authority is permissible — disciplinary proceedings are almost invariably a consequence.
The Federal Constitutional Court confirmed this — NJW 2008, 3489: there is a compelling public interest in disclosure.
The good news: the Higher Administrative Court of Münster held that a voluntary disclosure may be treated as a significant mitigating factor in disciplinary proceedings — as active remorse. It can help prevent removal from office.
Consequence: civil servants require a particular strategy that takes account of both the tax proceedings and the threatened disciplinary proceedings.
FAQ - Questions about self-reporting
What is a voluntary disclosure for exemption from punishment pursuant to Section 371 AO?
A voluntary disclosure pursuant to Section 371 AO is the only path back to tax compliance. It enables taxpayers to correct past tax evasion retrospectively and thereby obtain exemption from criminal punishment. The legislator grants this opportunity for fiscal reasons: the state wishes to gain access to previously concealed sources of tax revenue. The precondition is that the disclosure is complete, timely and made before the offence is discovered. All non-statute-barred tax offences of a given tax type must be disclosed in full — the so-called completeness requirement. In addition, the evaded taxes including evasion interest must be paid within the prescribed period.
When is a voluntary disclosure ineffective?
A voluntary disclosure is ineffective where one of the blocking grounds under Section 371(2) AO applies:
The offence had already been discovered and you knew this or ought to have anticipated it
You were notified of the initiation of criminal or administrative fine proceedings
An official has appeared for the purpose of a tax examination — tax audit or tax investigation
Substantive defects also render a disclosure ineffective: a partial voluntary disclosure — disclosing matters piecemeal — is ineffective under Federal Court of Justice case law. Equally, deviations of more than 5% from the actual evasion amount can invalidate the entire disclosure. The Hoeneß case demonstrated this: a single inaccuracy is sufficient to render the disclosure ineffective — and criminal proceedings then follow.
What does a voluntary disclosure cost?
The costs of a voluntary disclosure consist of several components:
Evaded taxes: the full tax liability must be repaid.
Evasion interest: pursuant to Section 235 AO, interest at 6% per year is charged on the evaded amounts. Over several years of evasion, this accumulates considerably.
Surcharge pursuant to Section 398a AO: where the evasion amount exceeds €25,000 per offence, an additional surcharge is payable, calculated by reference to the nominal evasion amount.
Exemption from punishment only takes final effect once all amounts have been paid within the prescribed period.
Can I file a voluntary disclosure for a foreign bank account?
Yes, voluntary disclosures for foreign bank accounts are possible and common. Accounts in Switzerland, Luxembourg, Liechtenstein, Austria and Turkey are particularly affected. Important: the blocking ground of "discovery of the offence" can be triggered by media reports alone. Where it becomes known that German authorities have purchased tax data from a particular bank, customers of that bank must reckon with discovery. The courts apply a strict standard: subjective hope affords no protection. The earlier you act, the greater your prospects of exemption from punishment. Do not wait for press reports.
Is a voluntary disclosure possible for cryptocurrency?
Yes. Those who have not declared profits from Bitcoin, Ethereum or other cryptocurrencies can file a voluntary disclosure. Cryptocurrency gains are subject — depending on the holding period and use — to income tax or capital gains tax. The tax authorities have significantly expanded their investigative capabilities in the cryptocurrency sector. International data exchange agreements and requests to cryptocurrency exchanges make discovery increasingly likely. A timely voluntary disclosure is often the safest course of action.
What happens if the voluntary disclosure contains errors?
Errors in a voluntary disclosure can have fatal consequences. The Hoeneß case made this known throughout Germany: although he had filed a voluntary disclosure, it was held to be ineffective on grounds of incompleteness. The result was criminal proceedings and a conviction. The Federal Court of Justice is strict: every tax offender has only one shot. The first voluntary disclosure must be accurate. Legal representation is therefore strongly recommended — to ensure that all periods, all tax types and all amounts are captured completely and correctly.
Can an attorney file the voluntary disclosure on my behalf?
Yes, a voluntary disclosure may be submitted by a representative. This is standard practice. As your attorney, I handle the complete preparation and submission of the voluntary disclosure — from clarification of the facts and obtaining the necessary documents through to support throughout the proceedings.
What particular risks apply to civil servants?
Civil servants must be aware: tax secrecy does not protect them from notification to their employing authority. Pursuant to Section 30(4) No. 5 AO, the passing of data from a voluntary disclosure to the disciplinary authority is permissible. Disciplinary proceedings are almost invariably a consequence. The good news: a voluntary disclosure is regularly treated in disciplinary proceedings as a significant mitigating factor — active remorse — and can help prevent removal from office. Civil servants nonetheless require a particular strategy that takes account of both sets of proceedings.