. . Germany - the taxman cometh

[taxing]

Finanzamt still working

Thanks Salsa for your advise. I was enjoying tikka masala til I received this note from Finanzamt

1. I was a freelancer.
2. I worked in Germany in the year 2005 for a period of 3 months and 10 days only.
3. The German local tax office prepayment assessment was 0 based on my Tax consultant's filing.
4. As my prepayment assessment was 0 and I was not a tax resident for the year 2005, I was not sure if I was required to file Tax returns. Happily ignored it.
5. I was working in Germany through a management company starting with A and now under Administrative proceedings.
6. I feel stupid for filing 2004 year returns now and leaving a trail.

I replied to Finanzamt as below:
Please find attached prepayment assessment notice.
I honestly do not remember any details for the year 2005 and give me more time to reply back.

Should I bother about following up with them?
Is there any statute of limitation on how far the Finanzamt can go back. I would not have any more records now.
Is there any linkage with the Finanzamt following up and investigating Management companies in UK.

[BlasterBates]

Well actually you are liable for taxes until you leave Germany so you should have filled out a tax return, even if you were only there 4 months, tax residency applies up until the date you leave. If you just leave it, probably nothing would happen in India, but you´ll be arrested as soon as you set foot back in Germany, and it is feasible you could be arrested elsewhere in the EU.

You need to see a lawyer, perhaps first in India to check if they can doing anything; though I suspect they can´t. If you plan to return to the EU you need to sort it with a German lawyer. Maybe your Indian lawyer can liase with a colleague in Germany, and you can sort it out that way.

You do face criminal charges, so don´t take it lightly, and yes they can´t prosecute you but there will be an arrest warrant out for you until you do go to court.

It looks like you have paid tax, so your fine and penalties will be estimated around any outstanding tax bill. I can´t see in the end this is going to be serious, once you get a German lawyer or tax consultant onto it. If the sums involved are small so are the fines and penalties as well.

Good luck

[Dunkirk]

the tax man still cometh

Well the tax man still cometh.
I contracted in Germany for less than year more than five years ago, and the tax man cometh for me too.

I think that at this point we can roundly reject the idea of being 'unlucky' and below the radar compared to the people who have avoided paying tax for many years. It looks like the tax office is working down the chain by association. No amount seems too small. If they have investigated any contractor who has worked for a company, they'll pull the list of anyone else who has worked there. Then they'll follow up with the recruiment agency.

What has happened to me is that I worked for a company in the travel industry. Several other contractors that have worked there have been busted for tax evasion, I suspect those at the very beginning of this forum posting two years ago worked for them too. The travel company has coughed up a list of names of people who worked there. There is one agency in particular who places people there and they have given up everyone's time sheets and contracts.

I've been contacted by the tax man saying that they're starting criminal investigations which sounds much like what others have said, and I've engaged a lawyer.

It would be useful to hear if at this point if anyone actually managed to avoid prosecution. Paying up seems like a given, but I'm wondering right now if anyone else has done this and managed getting a criminal record?

[Olly]

So were you paid by a Germany agency then? Just wondering by being there less than a year, especially with trips home and stuff, why you didn't just pay your tax in the UK and how you got on their radar that's all?
I guess there are lots of people who've done contracts longer than 6 months in a financial year through a UK agency but didn't actually spend long enough in the country to become liable for German tax. They're not chasing those people are they? How would they even know how long you were in/out of the country exactly?

[Dunkirk]

timesheets!

You get busted essentially because your client gives you up. The tax man knocks on all the doors and says 'give me the list'. And because they're paper loving Germans they do. If you're really unlucky your non-German recruitment agency actually has an agreement with the client about their mark up on your services - it might be fixed for all contractors. Then they can calculate how much you get paid.

The tax man is well aware at this point which companies use foreign IT Contractors. If you're really unlucky another contractor that worked there has already been prosecuted.

Paying tax in the UK at this time does not seem to deter them. In fact if you look at the start of the thread you'll see that the contractors actually paid tax in Germany and the UK.

From what other have said, the tax man will settle without prosecution, I'm just looking for some confirmation of that before deciding whether to fight or roll over.

[doodab]

You get busted essentially because your client gives you up. The tax man knocks on all the doors and says 'give me the list'. And because they're paper loving Germans they do. If you're really unlucky your non-German recruitment agency actually has an agreement with the client about their mark up on your services - it might be fixed for all contractors. Then they can calculate how much you get paid.

The tax man is well aware at this point which companies use foreign IT Contractors. If you're really unlucky another contractor that worked there has already been prosecuted.

Paying tax in the UK at this time does not seem to deter them. In fact if you look at the start of the thread you'll see that the contractors actually paid tax in Germany and the UK.

From what other have said, the tax man will settle without prosecution, I'm just looking for some confirmation of that before deciding whether to fight or roll over.

A colleague of mine (who works for the same consultancy but a different end client) worked for a while through one of those split income companies. When the inevitable trouble started he got a German accountant, who worked out what was owed and advised him to pay up. He hasn't been prosecuted AFAIK. I don't know if he's had to pay any penalties or fines though.

Having said that I heard from another colleague (my current team leader, and German, so trustworthy IMO) that two weeks ago the tax authorities turned up at other client site and arrested a number of people. I don't know if my colleague was one of these people or not as I've not spoken to him since I heard.

[Dunkirk]

negotiations

I'm lucky enough not to be in Germany, and I haven't been there since I worked there.

I was sent an email this week inviting me to go to a meeting in Germany where I can be questioned as the accused.
I had a lawyer ring the tax office for me just to find out why they suddenly wanted to talk to me and have found out that they have my timesheets - so they are well aware I was in the country less than a year.

Your friend that had an accountant negotiate their way out - could you ask them how their investigation from the tax office started?
Was it just an invitation to appear? Mine says explicitly that I'm being invesitagated for prosecution of tax fraud. That seems to match other things people have said in this forum.

I have been told that they always start as heavy handed as possible so they're taken seriously and that you can negotiate yourself from there to a better position. Can anyone tell me if that's true?

[JustMe]

Where did you work

I'm lucky enough not to be in Germany, and I haven't been there since I worked there.

I was sent an email this week inviting me to go to a meeting in Germany where I can be questioned as the accused.
I had a lawyer ring the tax office for me just to find out why they suddenly wanted to talk to me and have found out that they have my timesheets - so they are well aware I was in the country less than a year.

Your friend that had an accountant negotiate their way out - could you ask them how their investigation from the tax office started?
Was it just an invitation to appear? Mine says explicitly that I'm being invesitagated for prosecution of tax fraud. That seems to match other things people have said in this forum.

I have been told that they always start as heavy handed as possible so they're taken seriously and that you can negotiate yourself from there to a better position. Can anyone tell me if that's true?

What area did you work in Germany ?

[Dunkirk]

Munich

I worked in the Munich area, and it is the Landshut tax office that has contacted me.
Some of the other posters have said they were being investigated by the Bayern tax office, I'm not sure if that is the same of even if that makes any difference.

[EelamTiger]

I have been targeted!

Hi all,

I worked in Germany for two years back in 2006 and when I de-registered at the stadthaus, I had to give my forwarding address in Paris. Now, I have received a letter stating that the Finanzamt will proceed with a criminal proceeding. Anyone experiencing the same? What would be the preferred next step forward? Should I react or just keep quite?

A lot of experienced contractors have left Germany because of this matter and they could find jobs elsewhere with lower tax rates.

Cheers...