Finance Minister Lars Klingbeil (SPD) has announced plans to implement sweeping new measures aimed at combating tax fraud. According to the vice-kanzler, a self-disclosure should no longer automatically guarantee immunity from prosecution. He argued that criminals should not be able to simply buy their way out of wrongdoing. Klingbeil stated that in the rule of law, no one should assume that if they fear being caught, simply filing a voluntary disclosure will result in total immunity. He stressed that the legal system must act decisively because the billions of euros lost through tax fraud affect everyone.
Currently, tax evasion is punishable by either a fine or up to five years in prison. However, under current law (Paragraph 371 of the Tax Code), individuals are exempted from penalty if they voluntarily correct inaccurate information provided to the tax authorities. The original intent of this provision was to facilitate a return to honest tax practices. Nevertheless, the Ministry of Finance has expressed concern that this existing immunity creates “misleading incentives” possibly encouraging people to initially evade taxes only to declare them later under the expectation of being protected by a self-disclosure.
Minister Klingbeil aims to eliminate this loophole. The Ministry plans to propose a legislative change ensuring that future self-disclosures will only serve as a mitigating factor above certain financial thresholds, rather than granting full legal immunity. Klingbeil stated, “We are protecting those who follow the rules. The honest cannot be the fools”.
This initiative is part of a broader “action plan” designed to improve the fight against tax crime. Under this plan, the specialized unit tackling tax evasion at the Federal Central Tax Agency will be upgraded. Furthermore, tax authorities plan to centrally store data on a unified platform that will be analyzed using Artificial Intelligence.
Klingbeil emphasized that the clear message sent to tax evaders must be: “Do not even attempt it; we will catch you”. Following the Finance Ministry’s requests, the federal government will take a more active role in obtaining tax data, leading to the establishment of a “tip-off portal as a central point of contact” at the Federal Central Tax Agency.