The Federal Ministry of Finance (BMF) changes its approach to tax secrecy

The Federal Ministry of Finance (BMF) changes its approach to tax secrecy

The Federal Ministry of Finance (BMF) is changing its approach to tax secrecy

In a letter dated 13 January 2023 IV A 3 – S 0130/23/10001 :001 the Federal Ministry of Finance (BMF) has issued the previously published BMF circular dated 12 January 2018 – IV A 3 – S 0130/08/10006 Federal Tax Gazette 2018 I, p. 201 amended in sections 2.4 to 2.5, and a new section 2.6 has been added.

This results in the following changes with immediate effect:
2.3 Disclosure is required in particular where a civil servant or judge – whether on or off duty – persistently breaches their duty of loyalty to the Constitution. This may be the case, for example, if they persistently deny the existence of the Federal Republic of Germany (judgement of the Federal Administrative Court of 2 December 2021, Ref. No. 2 A 7/21, NVwZ 2022, p. 1379).

2.4 In the case of a civil servant in the tax administration or a judge, a tax offence committed in their own affairs constitutes a breach of official duty, which requires the data to be passed on to the authority responsible for conducting disciplinary proceedings or taking other measures under the civil service regulations in accordance with Section 30(4)(1a) and Section 29c(1), first sentence, point 6, first sentence of the German Fiscal Code (AO) or to Section 30(4)(5) of the German Fiscal Code (AO) can justify.

2.5 The unauthorised provision of assistance in tax matters by officials of the tax authorities also constitutes a breach of official duty.

2.6 In the cases referred to in points 2.1 to 2.5, it must be assessed whether a serious breach of duty has occurred. The provisions in sections 1.5 and 1.6 apply mutatis mutandis. If, in the opinion of the notifying authority, this is not the case, disclosure of the information in proceedings under Section 30(2)(1) of the German Fiscal Code (AO) “The data that has come to light is not admissible."

A further consequence of these changes is the tightening and clarification of the rules governing the disclosure of (tax-related) data in cases of misconduct, particularly by civil servants in the tax authorities or judges.

To what extent do these changes conflict with the fundamental principle of voluntary disclosure as a defence against criminal liability pursuant to. § 371 AO It remains to be seen whether these are compatible. In any case, a significant obstacle has been placed in the way of the possibility of returning to tax compliance. Civil servants therefore run the risk of facing disciplinary action, even in cases of inadvertent tax evasion followed by a voluntary disclosure that would otherwise exempt them from criminal liability.

We would be happy to provide you with comprehensive advice on all aspects that need to be taken into account when making a supplementary tax return or voluntary disclosure to public officials (particularly those within the tax authorities). However, it is important to note that a voluntary disclosure that exempts the taxpayer from criminal liability is only valid if it is made in accordance with Section 371(1) of the German Fiscal Code (AO) is complete. This includes all instances of tax evasion of the same type for which the limitation period has not yet expired, covering at least the last ten years. In order to make an effective voluntary disclosure that exempts the taxpayer from criminal liability, professional help and advice should be sought.

If you are unsure whether you have declared your income correctly for tax purposes, or if you are concerned that criminal proceedings might be brought against you, our specialist solicitors and tax advisers will be happy to advise you.