The tax legislation, which was tightened in 2015, does not seem to deter fraudsters in Germany. Last year, the evaded taxes totaled almost 1.25 billion euros, the highest value since 2017. This corresponds to the amount with which the federal government plans to subsidize long-term care insurance from 2022. In 7153 cases, final judgments or public prosecutor’s penalties were issued. This emerges from a letter from the Federal Ministry of Finance to the FDP financial expert Markus Herbrand, which the Süddeutsche Zeitung is present. The data shows that a trend has continued in 2020. In total, the tax fraud established in Germany since 2015 amounts to more than 6.4 billion euros.
The federal and state governments had long hoped to be able to deter tax fraudsters more from their actions with stricter legal regulations. The long-kept banking secrecy finally fell in 2015, mainly due to pressure from the USA; Since then, 104 countries have regularly exchanged information on the income and bank details of foreign account holders. This has increased the likelihood that income hidden abroad will be discovered – which made loopholes such as Swiss numbered accounts less attractive. At the same time, today’s SPD co-leader Norbert Walter-Borjans, then finance minister in North Rhine-Westphalia, bought CDs with tax data. Avoiders received new incentives through mitigating rules to surrender voluntarily. The number of voluntary self-disclosures increased dramatically for a short time, but decreased again over the years.
At the same time, the total amount of tax evaded increased. Federal Finance Minister Olaf Scholz instructed his officials in June to buy another tax CD from the Emirate of Dubai. The SPD candidate for chancellor said they wanted to uncover possible tax crimes. “Tax evasion is not a trivial offense, but a criminal act.” The monetary requirements and fines issued so far because of established tax fraud are still comparatively low; since 2015 they have totaled around 332 million euros.
The opposition accuses Scholz in particular of having watched the fraud for too long. “Finance Minister Scholz failed to take effective action against tax fraudsters,” said Herbrand. There are “blind spots and significant deficits” in the prosecution of tax crimes. The fines are partly inadequate for the fraud, “which means that the criminals are not deterred enough. I would have liked the finance minister to have taken the issue more seriously.”
Another criminal offense, organized fraud with sales tax, is hardly prosecuted in Germany until today. The EU Commission estimates that by posting the tax back and forth, at least 50 billion euros are evaded Europe-wide every year. Around eight billion euros of this go to the Federal Republic, where only six judgments or penalties have been issued since 2015 and only 18 million euros have been claimed. The fines were only a good 17,000 euros. According to Herbrand, the SPD and Union last rejected two applications from the FDP and the Greens on June 23 to take a stronger fight against fraud.