Criminal Tax Law 2025: Case law scrutinises every single statement (including the Federal Court of Justice (BGH) judgement of 14 October 2025 – 1 StR 445/24, BGH order of 10 December 2025 – 1 StR 387/25, BFH judgement of 14 May 2025 – VI R 14/22)
Anyone facing the accusation of Tax evasion to Section 370 of the German Fiscal Code (AO) The approach taken by those who have to deal with this issue is often based on assumptions that have long been accepted in practice. The annual VAT return summarises the advance returns anyway. After all, the tax office already has the relevant data in electronic form. And anyone who hands over their documents to a tax adviser has little to do, from a criminal law perspective, with the returns prepared on that basis.
Several rulings handed down in 2025 by the First Criminal Division of the Federal Court of Justice and the Federal Fiscal Court no longer support such assumptions. What they have in common is that they take the individual tax return seriously as the basis for criminal liability. This has significant implications for business owners and partners in partnerships, particularly with regard to the range of penalties and the limitation period.
VAT: Advance returns and annual returns are separate procedures
To date, according to the case law of the Federal Court of Justice, the annual advance VAT returns and the subsequent annual return have constituted a a single procedural offence within the meaning of the Section 264(1) of the Code of Criminal Procedure. The Senate expressly abandoned this line of reasoning in its decision of 10 December 2025 (1 StR 387/25). Incorrect, incomplete or omitted advance returns and the annual tax return for the same tax period are now considered separate procedural offences.
The procedural offence determines what a criminal court is authorised to rule on and what a judgement subsequently protects against. This must be distinguished from the question of what the punishment ultimately relates to. In this respect, the Federal Court of Justice (BGH) maintains that incorrect advance notifications are generally regarded as predicate offence for which a further penalty was imposed resign on the basis of an incorrect annual declaration. However, this only applies as long as the annual declaration itself can still be prosecuted. If it is excluded from the proceedings – for example, because the criminal proceedings have been limited to the preliminary declarations – these can be adjudicated upon independently. This was precisely the situation in the case in question.
The advance return is therefore not a provisional declaration that is settled by the annual return. Each individual advance return may form the subject of separate criminal proceedings. Whilst the Federal Court of Justice (BGH) points out that a conviction for several advance returns instead of an annual return will not, as a rule, result in a heavier penalty, this does not alter the nature of the proceedings.
Partnerships: New value threshold of 140,000 euros
In the case of partnerships, income is assessed under a separate procedure determined separately and uniformly (Section 180(1), first sentence, No. 2(a) of the German Fiscal Code (AO)). The assessment notice subsequently binds the shareholders’ income tax assessments. This applies to professional partnerships as well as commercial partnerships and family-run asset-management partnerships. According to the case law of the Federal Court of Justice (BGH), an incorrect declaration for assessment purposes constitutes a separate offence. It constitutes a separate offence alongside an incorrect income tax return for the same assessment period, even if both relate to the same income (BGH order of 30 April 2025 – 1 StR 39/25).
In its judgement of 14 October 2025 (1 StR 445/24), the Federal Court of Justice (BGH) established, for the first time, a separate value threshold for such declarations in respect of the a particularly serious case specified. A tax advantage of a significant magnitude within the meaning of the Section 370(3), second sentence, point 1 of the German Fiscal Code (AO) This is the case where the income accrues to the parties concerned by at least 140,000 euros have been found to be too low. The amount is derived from the well-known threshold of 50,000 euros for tax evasion. The Senate bases its calculation on a flat-rate maximum tax rate of 42 % and applies a safety margin of 15 %.
The sole determining factor is the incorrect assessment notice. The actual amount of income tax evaded by the individual shareholders is irrelevant to the value threshold. The Senate expressly sets aside an earlier decision which had still been based on the subsequent assessment notices. If, due to the personal circumstances of those involved, the actual underpayment is significantly less than 50,000 euros, this may be taken into account when determining the penalty. It does not, however, alter the threshold itself.
The significance extends beyond the scope of the penalties. In particularly serious cases, the limitation period under criminal law is, according to Section 376(1) of the German Fiscal Code (AO) since the Annual Tax Act 2020 15 years. According to the Federal Court of Justice (BGH), this time limit is not dependent on whether the court actually applies the standard example in the individual case. The time limit only begins to run once the offence has ceased. If the income tax assessment notices are issued after the assessment notice, that is the last income tax assessment notice based on the incorrect assessment notice. If they are issued beforehand, the limitation period generally begins with the assessment notice; in the event of a subsequent amendment pursuant to Section 175(1)(1) of the German Fiscal Code (AO) but only once the notice of amendment has been issued.
Data available electronically does not constitute knowledge on the part of the tax office
The Federal Fiscal Court had to rule on a case involving a married couple who were obliged to submit income tax returns due to their combination of tax classes III and V, but who failed to do so. The tax office proceeded with the case as an assessment on the basis of a request. Although the electronic payroll tax certificates were available to the tax office under the couple’s tax reference number, the case only came to light years later. Whether the tax assessment notices could still be issued depended on whether the extended Assessment period a ten-year period applied to evaded taxes (Section 169(2), second sentence, of the German Fiscal Code (AO)).
The Federal Fiscal Court has ruled that, for the purposes of the tax office’s knowledge, what matters are the individuals responsible for handling the tax case (Federal Fiscal Court judgement of 14 May 2025 – VI R 14/22). The contents of the paper file and the electronic file are to be attributed to them. By contrast, data that is merely available for retrieval in the tax authorities’ data storage systems is not regarded as known, even if it is linked to the tax reference number. The Federal Fiscal Court (BFH) left open the question of whether the tax office’s knowledge would in any event preclude tax evasion by omission. In any case, the objection that the tax authorities had all the data anyway does not hold water in this form.
Involving a tax adviser does not absolve one of liability
Anyone who provides their tax adviser or accountant, acting in good faith, with incorrect documents and has them submit tax returns on that basis is themselves guilty of tax evasion. The Federal Court of Justice classifies them as indirect perpetrator who uses the unsuspecting adviser as a tool (Federal Court of Justice (BGH) ruling of 10 December 2025 – 1 StR 387/25, with reference to the BGH ruling of 26 June 2025 – 1 StR 493/24). If several statements are based on a single handover of documents or a single set of instructions, they are combined into a single offence. If he issues separate instructions for each statement, they remain separate offences. In the case in question, this reduced the number of offences from six to three.
Payments in criminal proceedings and their tax treatment
If criminal tax proceedings are brought against a financial penalty pursuant to Section 153a of the Code of Criminal Procedure Once a fine has been imposed, the question arises as to whether the payment is tax-deductible. The Federal Fiscal Court has ruled that financial penalties under Section 153a(1), second sentence, No. 2 of the Code of Criminal Procedure (StPO) fall under the Prohibition on deductions of the Section 12(4) of the Income Tax Act (EStG) are excluded because they are of a punitive nature (Federal Fiscal Court judgement of 29 January 2025 – X R 6/23). This applies to conditions requiring compensation for the damage and the confiscation of the proceeds of the offence pursuant to Section 73 of the German Criminal Code (StGB) However, the prohibition on deduction does not apply in this case. When discussing the discontinuance of proceedings, the form in which a payment is made is therefore not irrelevant.
Implications for practice
These rulings shift the focus from the tax liability for a given year to the individual tax return. For partners in partnerships, the threshold of 140,000 euros means that even a single incorrect self-assessment return constitutes a particularly serious case involving 15-year limitation period can justify this, even if the individual’s income tax is significantly lower. In the case of VAT, each advance return can be tracked separately as soon as the annual return is excluded from the process.
Anyone who identifies discrepancies in previous tax returns should therefore review all the relevant returns, i.e. preliminary returns and annual tax returns, as well as assessment notices and income tax returns. A Voluntary disclosure to Section 371 of the German Fiscal Code (AO) It only exempts the taxpayer from penalty if it fully covers all tax offences of a particular type committed within the last ten calendar years. According to the latest case law, whether an offence is time-barred can only be assessed on the basis of the individual tax assessment notices and should not be assumed across the board. Our specialist tax lawyers and tax advisers will be happy to assist you in reviewing tax adjustments, voluntary disclosures and the statute of limitations, as well as in your defence in criminal tax proceedings.