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GRP Rainer LLP

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Automatic exchange of financial information has begun – Voluntary disclosure for tax evasion

January 2018

The wagons are circling around tax evaders. The automatic exchange of financial information began on September 30, 2017. An initial 49 countries are participating in addition to Germany.

The start of the automatic exchange of financial information in the field of taxation also spells the end of banking secrecy in many of the participating countries. Former tax havens are set to be squeezed further. For tax dodgers who still wish to conceal untaxed income from capital abroad from the German exchequer, the wagons are circling ever closer and the risk of being discovered continues to increase.

Since the end of September, the participating countries have been exchanging information on accounts with the respective home countries of account holders. This initially concerns account movements from 2016 onwards. More countries will be participating in the automatic exchange of information in a year’s time, including, for instance, Switzerland. In total, more than 100 countries will be involved in the automatic exchange of information as a means of further expediting the fight against international tax evasion.

We at the commercial law firm GRP Rainer Rechtsanwälte believe that all tax evaders with untaxed illicit earnings in foreign accounts need to take action urgently, as the risk of tax evasion being detected continues to go up. Having said that, it remains possible to submit a voluntary declaration that leads to immunity. This should not, however, be kicked into the long grass any longer, because a voluntary declaration can only lead to immunity if it is submitted on time, i.e. before the offence is discovered by the authorities. The voluntary declaration also needs to be complete and error free.

For a layperson, it is almost impossible to keep track of the exacting requirements for a voluntary declaration to lead to immunity, let alone fulfil them. That is why it is crucial not to forgo obtaining expert assistance from lawyers who are experienced in the field of tax law. Those who nevertheless wish to go it alone or make use of standard templates found online are running a considerable risk of making mistakes and thus voluntary disclosure failing. Each case needs to be assessed individually; there are no ready-made solutions if a voluntary declaration is to lead to immunity.

Lawyers who are experienced in the field of tax law can examine each individual case in detail and produce a tailored voluntary declaration that is actually capable of leading to immunity.

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