. . Germany - the taxman cometh

[admirals speedport]

After working in Germany in 2005/06, I received a MARD this week. I was totally oblivious to the illegality of these split-income schemes when I was working there. Due to the number of management companies employing these schemes AND the fact that ALL my contractor colleagues were doing the same, I thought it was ok (and my german accountant C***H*** told me it was legit).

Only after receiving the MARD did I do some research and find this thread.

I left in May 2006 and have been working in the UK ever since. I've lived at the same address since mid-2007 yet the Finanzamt made little effort to trace me (can't be particularly difficult).

So what's done is done, and I'm paying up the tax + interest within the next week or two. This will totally clear me out and affect the next 20 years of my working life.

But now I've been warned I may be in receipt of a "strafbefehl". I've not got the money to fight it, nor the money to pay it. So what happens if I can't pay? Can they try to get the money from me in the UK? I've got the address of a german tax lawyer whom I'm going to contact soon.

I just wondered what other peoples experiences were of dealing with a strafbefehl from the UK.

How do you know they made little effort to trace you ? Presumably you have there fore only had the contact from HMRC regarding the MARD.

Who informed you about the possibility of a Strafbefehl and what is it for ? If you're already paying back the tax and penaltied, what's the issue ?

[cheakyp]

I got a german accountant to check things out. There was a penalty order raised against me in 2012 but this is the first I've heard about it.

The accountant said that I should expect a new one in the next few weeks.

[BlasterBates]

After working in Germany in 2005/06, I received a MARD this week. I was totally oblivious to the illegality of these split-income schemes when I was working there. Due to the number of management companies employing these schemes AND the fact that ALL my contractor colleagues were doing the same, I thought it was ok (and my german accountant C***H*** told me it was legit).

Only after receiving the MARD did I do some research and find this thread.

I left in May 2006 and have been working in the UK ever since. I've lived at the same address since mid-2007 yet the Finanzamt made little effort to trace me (can't be particularly difficult).

So what's done is done, and I'm paying up the tax + interest within the next week or two. This will totally clear me out and affect the next 20 years of my working life.

But now I've been warned I may be in receipt of a "strafbefehl". I've not got the money to fight it, nor the money to pay it. So what happens if I can't pay? Can they try to get the money from me in the UK? I've got the address of a german tax lawyer whom I'm going to contact soon.

I just wondered what other peoples experiences were of dealing with a strafbefehl from the UK.

You need to differentiate between tax you owe and fines. My understanding is that Tax gets written off if you go bankrupt, but fines don't.

You urgently need legal advice, but my understanding would be, pay the fine first and then the tax bill.

This means in the event that you do go bankrupt you're not left with a huge bill that they can chase up.

I'm not a legal expert, but if you are in danger of going bankrupt they might even accept a settlement. This would not be the case with the fine (Strafbefehl).

Consult with your German tax lawyer before you make any payments.

[cheakyp]

Thanks BB
The problem is that HMRC are collecting the tax but I've not received the fine.

Just wondered how much protection I have living in the uk and not visiting germany again!

[BlasterBates]

Thanks BB
The problem is that HMRC are collecting the tax but I've not received the fine.

Just wondered how much protection I have living in the uk and not visiting germany again!

You really need to be careful of the fine perhaps take some legal advice in the UK. The point is, whatever the legal situation is in the UK, it won't go away even after bankruptcy. However your tax debts with HMRC will be written off.

Tax debt, bankruptcy and Special Relief « TaxAid

Fines are not something you can ignore and these days are chased across borders, so you want to take legal advice on this. If you ignore a fine they arrest you and then you can end up with further fines or even a short spell in prison, unless you can pay bail.

[cheakyp]

Thanks once again BB.

Legal advice in Germany and UK is certainly required. I don't want to enter bankruptcy - looks like selling house is only option at the moment.

Not that I have any idea of the size of the fine. The tax "evaded" (lets not call it avoided any more) came it a sum of ~24k Euros.

[BlasterBates]

DHPG - Steuerhinterziehung - Steuervergehen werden hart bestraft (Dr. Rohde)

According to the above link, the fine will be between 1 and 2 times the amount of tax not paid.

i.e. somewhere between 24k and 48k EUR

It depends on how much you've been earning over the last 3 years and the circumstances of the case. Arguing that you really thought it was legal, I would have thought would help reduce the fine.

Judging by the last poster who got a fine it would seem you have a reasonable chance of a fine at the lower end. I could imagine that the judges realise British contractors are a bit out of their depth, when it comes to German tax laws, but you also need to think about worst case and how you would pay it.

Good luck, the next step would be to talk to a German tax lawyer, and a UK lawyer about what happens with the fine, though I suspect this gets chased up through the UK legal system.

[cheakyp]

DHPG - Steuerhinterziehung - Steuervergehen werden hart bestraft (Dr. Rohde)

According to the above link, the fine will be between 1 and 2 times the amount of tax not paid.

i.e. somewhere between 24k and 48k EUR

It depends on how much you've been earning over the last 3 years and the circumstances of the case. Arguing that you really thought it was legal, I would have thought would help reduce the fine.

Judging by the last poster who got a fine it would seem you have a reasonable chance of a fine at the lower end. I could imagine that the judges realise British contractors are a bit out of their depth, when it comes to German tax laws, but you also need to think about worst case and how you would pay it.

Good luck, the next step would be to talk to a German tax lawyer, and a UK lawyer about what happens with the fine, though I suspect this gets chased up through the UK legal system.

Well the fine came in at 19K EUR which sounds like it's at the lower end of what I could have expected. I've approached a German lawyer but it sounds like this amount isn't worth contesting because it could end up being a lot more in fees (and possibly an increased fine).

So I'll be paying up in the next few weeks and treat this as a very harsh expensive lesson. I thought about not paying but I'd never feel comfortable about even flying over Germany (I can imagine some sort of scenario where you're on a plane that has to make an emergency landing !!)

Makes me feel very naive to have put my trust in so called "professionals" (like so many other people caught in this situation have). Reading the rest of this thread sounds like some have had it worse than others and at least I've got family who can help me resolve this situation. And at least I wasn't doing this scheme for several years like many were - I could have lost everything.

[BlasterBates]

Happened to me once when I was working in Luxembourg where some Management company suggested that if I had an adventurous spirit I could arrange some of my salary to be paid into a Bermudan account, and when I asked whether it was legal he giggled in that way that naughty kids do at the back of the class . Somehow my instinct said "no way Jose", and the same with all these Isle of Man schemes.

It brings me out in a cold sweat to think what would have happened if I'd said yes. I'm pretty sure the Lux authorities would have carefully scrutinised that. They did write to me after I left Luxembourg and demanded a tax declaration which nobody told me I was supposed to do. Fortunately I'd chosen the legit route, otherwise I would probably been very deep in the "poo".

Sad really how much damage they've done.

[Doitall]

Thanks BB
The problem is that HMRC are collecting the tax but I've not received the fine.

Just wondered how much protection I have living in the uk and not visiting germany again!

Naturally, I don't know whether you have paid over any funds yet or what your legal advice has told you, but a MARD can be challenged on two counts:

1) If the case in the originating country is still contested. Since you were unaware there was a case against you until the MARD arrived, clearly the case was still contested, since you had been denied the opportunity to deal with it. As you put in your first post, there was no breakdown of how the figures were arrived at, or whether they were correct or not. In the first instance, you should have had the MARD rejected because you had not been able to contest it.

2) There are time limits on the raising of a MARD (five years after the debt is realised according to the documentation), so it is perfectly possible the MARD was invalid on that score.