. . Germany - the taxman cometh

[AndyCapp]

Criminal Conviction: 240 days in jail ....

Somebody I know (now living well away from Germany) received a letter from the court in Munich. He doesn't understand German and gave it little urgency. When I read it for him, I had a bit if a shocker for him.

This letter was a court judgement. Made without any defence - only a judge and a prosecutor (yes, in Germany that is allowed). It was a fine on the non-payment of back-taxes. They did give a nice 14-day period in which to object - but that had elapsed. Now the killer. Failure to pay fine resulted in an automatic jail term, calculated on a scale from fine amount. In this case 240 days.

Now he has a criminal conviction in Germany and a 240 day jail term.

Oh and of course, they still want the back-tax and fine.

[CodeKid]

Info on MARD

I have had to read the whole thread from the start, so apologies if I am repeating anything.

I am in the same situation as many here and many others that I know.

However, I received a MARD last year and for those unaware of this little beauty let me worry you.

Basically those nice Germans can tell any other EU tax authority that they are recovering a debt from you and they state the amount. No proof or reason must be given. Now your home tax authority is REQUIRED to recover the debt on behalf of the Germans and pass the recovered funds back to Germany.

I had a pleasant chat with the woman from my home tax authority and she said they do see these case through ....

So if any of you thought you were safe once out of Germany, think again.

Also, I have a very good German friend of mine who's a Lawyer - though
not in tax affairs. He put me in touch with a tax lawyer friend of his.

I have been told.
1. Do not ever set foot on German soil - there may be an arrest warrant
2. The German tax office act with impunity
3. Mr H the Steurberator is as bent as a nine bob note
4. Most, if not all agencies with a presence in Germany have passed all the
details of who earned what to the tax offices
5. They are not interested in doing deals - it's blood or nothing.

PS. Anybody who thought they'd be clever and transfer assets back in their home countries to spouces etc, think again. The courts can - and do - unwind such transactions. This is a simple task for your home country tax authority.

Getting info on MARD is not that simple. It's something that's been around for a while but was given much extra powers in 2009.

Here are some links to info on MARD (Mutual Assistance for the Recovery of Debts) that might be useful - just found by quick googling.

HMRC info:
http://www.hmrc.gov.uk/MANUALS/dmbmanual/DMBM560025.htm
Tax advisor info 2008:
http://www.tax.org.uk/attach.pl/7112...lient_Cory.pdf

Note that they won't pursue while any appeal against the debt is pending but when all avenues are exhausted, the FA can ask HMRC to recover the debt and HMRC have to treat it like a UK debt (= potentially agressive recovery)

A steuerberater told me that they had heard of ex clients in UK who had faced HMRC recovery action. But sometimes you never know what to believe from the steuerberaters or the rechtsanwalts - some think that they're all in cahoots with the FA anyway)

CK

[CodeKid]

More on MARD

More detailed info from HMRC manuals on how they handle requests (inbound requests)
http://www.hmrc.gov.uk/manuals/dmbmanual/dmbm560010.htm

CK

[SalsaFever]

I've consulted to both UK and German Tax Lawyers regarding the possibility of recovery from abroad and the answer was always highly unlikely.

Although MARD makes it virtually possible, I still suspect if UK is really enforcing it, especially small amounts like 30k-100k which we are talking about here.

Moreover, MARD is a protocol between EU member states, doesn't applicable to the assets in Switzerland and any other offshore location like Jersey or Man of Isle, or even Cyprus is not in the list.

If you are in this game, you should play it by its rules, if you are dumb to keep your money in a UK account, you have no right to complain.

- Make sure your money in the safe hands (e.g south africa)
- Make sure your property owned by your family trust or management company
- Make sure your car is registered to under your grandma's

So when the tax man comes, the only possibility is the wage garnishment, which is actually limited by %25 of your wage, will take them forever to collect their money..

And there is another silver bullet, you can always bankrupt (insolvency) in Germany before you leave, which nowadays very popular among expats who has no way out of this mess. I know some people currently in process of filing chapter 11, I'll let you guys know the outcome.

[SalsaFever]

This letter was a court judgement. Made without any defence - only a judge and a prosecutor (yes, in Germany that is allowed).

...

Now he has a criminal conviction in Germany and a 240 day jail term.

It sounds a bit like there is a troll here..

First, the trial in absence (latin: in absentia) is highly unlikely in Germany, since Germany is one of the few member states which are complaining about in absentia. Moreoever German Criminal Procedure Law StPO $232 clearly states that serious crimes (defined 180 days or more in jail) can't be tried in absence. So the verdict of 240 days in Jail, is against the law.

Second, someone with first offense of tax evasion is going to be jailed. Even you got jail punishment, it will be automatically deferred in probation. So technically it's not possible that you can jailed if you evade less than a million euros..

Another inconsistency is that 240 days in Jail equivalents to 30,000 euros of evaded tax, which is actually below 50,000 euros limit, which does not required jail term at all..

[AndyCapp]

Strafbefehl

Here is the email from the German lawyer, for those here who prefer to be ignorant.

This letter is a juridical sentence. Against this sentence he has the possibility to attack it. This must be done at most in a period of
2 weeks having got this letter. So in Germany exists the possibility, to receive such sentences without a Court date, if the prosecutor and judge are agreeing. So: No Court Case, but anyway a sentence,. If your friend attacks this sentences in time, a Court Date has to take place where he must come to
- if not his attacks will be dismissed and the sentences are than fixed (not any more attackable). Or he can do this be using a lawyer.

This letter is the consequence of his delict: Not paying the taxes. This sentence is not a consequence for not paying back the taxes, the Finnanzamt has checked and set afterwards.

So if he would come to Germany, he must go to jail (normaly). You see that the have written 240 Tagessätze what means that he else for has to go for 240 days into jail !

[SalsaFever]

So if he would come to Germany, he must go to jail (normaly). You see that the have written 240 Tagessätze what means that he else for has to go for 240 days into jail !
[/I]

Is this 'attorney' mixing 'Freiheitsstrafe' (imprisonment) with 'Geldstrafe' (fine)? The word 'Tagesssätzen' used to describe the amount of fine depend of the portion of convicted's yearly net income.

'240 Tagessätze' means he fined an amount of 240/360 of his yearly income at the time of being convicted. (not the time when the criminal act done). (so if you are going to be convicted for sure, just resign from your job, register as unemployed!!)

If the prisonment is the case, the term 'Freiheitsstrafe' used. That's mostly suspended ('ausgesetzt zur Bewährung'), means if unless a further offense, the convicted are free to go.

For example, here is a brief judment from a Hamburg Court dated 04/2009:

AG Hamburg , Urteil aus April 2009, Steuerhinterziehung in 54 Fällen, Steuerschaden EUR 290.000,00, 12 Monate Freiheitsstrafe, ausgesetzt zur Bewährung, sowie zusätzliche Geldstrafe in Höhe von 300 Tagesssätzen,

Means, found guilty of 54 counts and owned EUR 290,000 in back taxes, 12 months prisonment (suspended), plus fined amount of 300 days of net income.

The Tagessätze is calculated the net income of the time being (means minus tax, social security, expenses etc) minus 2/10 for non-working spose and 1/10 of each children, so if you have two kids, it's will be calculated based on only %60 of your daily income.

[AndyCapp]

Strafbefehl

I have the "Strafbefel" here (all 10 pages of it).

In the "festgesetz" section, it is quite clear. Jail.

The jail term is calculated per EUR 100 owed. Several years are covered. For example, one year has a "50 Tagessätzen zu je 100 €, ingesamt 5.000 €"

Of course, I don't know what the sequence of events leading up to this were, in this particular case.

[kalander]

Contracting in Germany

hi all,

I have noticed this thread has been going on for a very long, therefore I though I would raise my concern here rather than starting a new one.

Brielfy I am british and live in uk, seeking to secure a contract in germany, and the agency is based in lux (with in EU).

When agecny pay, it will from lux account to which ever I choose.

reading soo many options etc, can some please advise, wht would be the best option, I have also read abt offshore, ppl say its troublesome, but in my particular case, where agecny is based in one country and my work in another, and I dont think I will bother my country of residence (UK) with any taxation, I also indend to return to UK after my contract, also the length of contract is 3 month rolling up to a year and may be more.

Therefore I am interested in some long term setp....

I know you guys been there and have done it, please advise me best solution...

Many thanks in advance...

[SalsaFever]

I think you are quite lost in those ten pages.

In the "festgesetz" section, it is quite clear. Jail.

How does it make it 'quite clear'? The "festgesetz" means something like 'verdict', it doesn't mean anything unless you copy and paste relevant paragraphs in this section.

The jail term is calculated per EUR 100 owed. Several years are covered. For example, one year has a "50 Tagessätzen zu je 100 €, ingesamt 5.000 €"

"50 Tagessätzen zu je 100 €, ingesamt 5.000 €" exactly means "50 days rate of 100 €, total € 5,000"
100€ most likely indicates his daily net income, multiply by 50 days makes € 5,000 total fine he has to pay. Sounds like a 'geldstrafe' to me.

I know the jail rates are calculated based on 125€ per day in tax crimes. For e.g. if you evaded 12,500€, you are facing 100 days in jail in rare circumstances, for example, you are a serial tax criminal with prior convictions with no possibility of probation.

PS: (one opinion thanks PMs, jail triggered if you don't pay your fine then its converted to jail terms calculated based on fine amount / 125€ , not the evaded amount, need clarification)