On 21 December 2016, the legislature adopted a draft bill to combat tax avoidance and to amend other tax provisions.
The main purpose of the Act is to ensure transparency in business relationships between domestic taxpayers and companies with their registered office or place of management in countries or territories outside the European Union or the European Free Trade Association.
This draft bill sets out, amongst other things:
Obligations to report business relationships with companies from third countries; obligations on financial institutions to report business relationships with taxable individuals that they have established or facilitated. Furthermore, banking secrecy for tax purposes is to be abolished. This will remove banks’ obligations of confidentiality towards the tax authorities. In addition, the automatic retrieval of account information by the tax authorities is to be extended.
Under criminal tax law, this Act also stipulates that the use of a third-country company to conceal tax-relevant facts, so-called ‘letterbox companies’, constitutes a serious case of tax evasion and that, consequently, the ten-year limitation period for criminal prosecution applies instead of the five-year period.
Furthermore, the limitation period for payment in cases of tax evasion is to be extended to ten years across the board.
The background to this law includes, amongst other things, the revelations in the press relating to the so-called Panama Papers and the ensuing public debate on shell companies in so-called tax havens.
For further information, the team at GWGL Rechtsanwälte Fachanwälte Steuerberater PartG mbB will be happy to assist you.