International advice for medium-sized businesses

On the 23rd and 24th of May 2014 the IAPA (International Association of Professional Advisers) had their annual meeting in Hamburg where the international network celebrated their 25th anniversary. 34 persons from 16 European tax advising and auditing firms attended the meeting.

The participation of colleagues also from non-member countries at the annual meeting shows the attractiveness of this network as well as the increasing necessity for advisors of medium-sized businesses to gain international know how.

Apart from professional exchange via presentations about international tax law and lectures about changes in tax law in the countries of the IAPA members, Somann & Scheller had the opportunity to present their office to the IAPA colleagues.

The successful event has again emphasized that the members of the IAPA can give their clients fast and first class professional advice because of the intensive co-operation between the offices when it comes to cross-border cases.

Author: Claudia Keidies, Partner at Somann & Scheller, Hamburg

Tax fraud reports in Germany

At the moment you can read a lot about the so called “report to the tax authorities of false or incomplete tax declaration“, where there is no penalty to fear in Germany if one fulfills certain requirements. To avoid the penalty in detail one has to:

1.    Lay open the full amount of the evaded tax in the last five years and
2.    Pay the whole tax debt plus penalty loading supplies plus interests.

Altogether this can be expensive enough already.

If the “report to the tax authorities of false or incomplete tax declaration” is incorrect in any way this can lead to a disaster.

Exactly this could be seen in the case of Uli Hoeneß, former Manager and just resigned president of the FC Bayern München. He was afraid that his name was written on a tax-CD from Switzerland. Therefore his consultants quickly prepared such a tax fraud report. Probably too quick, because it finally failed.

The interesting point about the case of Uli Hoeneß was that – in the beginning – the amount of the evaded tax was expected to be about 1 Mio. €. As soon as the process at the regional court Munich began the amount raised up to 3 ½ Mio. €. After 4 days of processing the amount added up to – listen exactly – 28 Mio. €. This was also exactly the day when the court did not want to inquire anything anymore. Uli Hoeneß got imprisonment for 3 ½ years and – who wonders – he accepted this penalty.

Nowadays there is a huge discussion if it’s appropriate to allow such tax fraud reports at all. At the end the financial administration won – because of the amount of tax income the country receives from those reports.

But most probably such tax fraud reports will be much more expensive in the future. It is planned to tax the last 10 years and the penalty surplus will also rise up.

In any way – we expect to get more such cases up to the end of the year.

Author: Claudia Keidies, Partner at Somann & Scheller, Hamburg