PwC under suspicion: raid on suspected tax evasion – economy

The voluntary disclosure is a practical tool for tax evaders who do not feel like going to prison. In the past decade, it was particularly popular with wealthy private individuals who had stashed untaxed money abroad. While finance ministers bought tax CDs with data from Swiss banks and the risk of discovery increased, the alleged tax evaders sought advice on how to discreetly avoid lengthy criminal proceedings by voluntarily reporting and paying back taxes. If they did everything right, they would get away with it. Large law firms such as Pricewaterhouse Coopers (PwC), with the necessary know-how and dependencies on both sides of the Swiss border, were particularly in demand for this service.

It is precisely because of this advice that PwC itself has problems with state authority: There is a suspicion that PwC evaded taxes by advising tax evaders. On Tuesday morning, according to information, the Süddeutsche Zeitung more than 250 officials from the public prosecutor’s office in Frankfurt, the Hessian tax investigation department and the Federal Criminal Police Office for searches in the German headquarters in Frankfurt, at locations in Berlin, Düsseldorf, Hanover and Stuttgart as well as in the private homes of the accused. The attorney general’s office upheld the measures without naming any company or suspect.

Between 2012 and 2017, it is suspected, PwC is said to have advised clients on voluntary disclosures in Germany, but billed the services via the branch in Switzerland and thus misled the tax authorities about the actual background of the sales. As a result, those responsible had wrongly avoided sales tax, according to the accusation: “The inclusion of the Swiss company is said to have served exclusively to conceal the consulting services in Switzerland and thus to evade sales tax,” said the Public Prosecutor’s Office. PwC is said to have withheld more than eleven million euros from the tax authorities in this way. Eight senior managers are currently charged, four of whom are former.

Tax audits made tax investigators suspicious

A spokesman for the auditing company, which also offers advice on legal and strategic issues and tax matters, did not comment on the matter. “Public prosecution investigations keep coming back,” said the company. One cooperates fully with the authorities.

According to SZ research, the investigators discovered several traces more than a year ago. The alleged irregularities were noticed in the course of a tax audit and in criminal tax proceedings by PwC clients: While the clients were largely looked after by German PwC people and the procedures were coordinated in this country, the invoices are said to have been sent from Switzerland – which the tax investigators apparently suspicious made.

Should this prove to be the case, then one of the world’s largest tax consultancy firms might have operated a tax evasion model itself. Nevertheless, it may well be that the allegations turn out to be baseless at some point. PwC is owned along with Deloitte, KPMG and EY to the so-called Big Fourwho have divided the global auditing market among themselves. Typically, they are organized internationally as an association of independent companies – primarily to limit liability risks. Obviously, this structure can also be used in other ways: for example, to save taxes yourself.

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