. . Germany - the taxman cometh

[JustMe]

I am one of the people being investigated. I have put the question whether I could be stopped at immigration directly to the tax officer handling my case and the answer was NO. You do not need to worry about this matter.

Another thing is that now I know for sure the current ongoing investigation of the MCs' clients will involve investigating people in European countries, and being out of Germany does not mean one is off the hook.

Of course you are investigated. Everyone will be investigated if they used albany or afss. But the TaxAuth. should have proof. If you not living in Germany, it will be very hard to investigate you. Only the local tax author. have the right to search your house for documents. So I advise everyone to clean his/her paperwork.

[Trout]

The tax authorities got the proofs directly from client, agent and MC. By the time they got in touch with me they already had so much info, that denying all would have been useless. They could have caught me just with the info from other sources, the documents they got from me would not have been necessary.

[BlasterBates]

Of course you are investigated. Everyone will be investigated if they used albany or afss. But the TaxAuth. should have proof. If you not living in Germany, it will be very hard to investigate you. Only the local tax author. have the right to search your house for documents. So I advise everyone to clean his/her paperwork.

That might not work, although they probably won't prosecute. What they do is unless you answer their enquiries they'll just send a huge bill and expect you fight it legally. If you don't pay, you then get penalties on top. You can reckon with a tax bill, at the very least in the tens of thousands. They don't need to raid you for that. I know someone who was caught like that after he'd returned home. He received a tax bill of EUR 100,000. However if you're outside the country, they're more likely to negotiate to settle.

[NotAllThere]

Go to a neighbouring Schengen country then enter overland.

Although it appears you won't be stopped for tax irregularities, part of Shengen is the exchange of information. So if there were to be a warrant for your arrest in Germany, then you could be picked up at your point of entry; France, Denmark or wherever.

[xiao147]

So how do they catch up with or inform people who have not left a forwarding address and are not registered with any european tax authority?

Surely their only option would be a border check? But no one seems to think that would happen...

[darmstadt]

I do know that the German banks transfer the account numbers and details of every German bank account to the Finanzamt daily and they also get other EU countries doing this as well for them...

[BlasterBates]

So how do they catch up with or inform people who have not left a forwarding address and are not registered with any european tax authority?

Surely their only option would be a border check? But no one seems to think that would happen...

Normally would be the tax authority, as they regularly exchange information. Of course if they suspect they know where you are, unless it is soemwhere like the Cayman Islands or Burma, then the authorities will probably give information if it is to do with tax evasion, i.e. any criminal offence.

The thing is once you've left depending on the amount and where you are they might just not chase it up. So given the circumstances probably not a bad strategy.

In fact the contractor who I knew who was chased up in the UK, negotiated a much lower settlement than the 100 grand., more like 20 maybe even less, I'm not sure how much. If you're abroad they're far weaker than when you're in Germany. Basically his argument was "wot you're goin a do then?". I presume they would have had to chase him through the UK court system, and that would have been expensive.

[Dominic]

"Sham" company

the exact same problem happened to me.
I am back in the UK now 250,000 Euros lighter and still awaiting a penality. I have now a UK laywer and we have started the process of sueing the German Tax advisor.

In combination with th elitigation, I have now to start investigating if the German Tax authourities were within the law (that is the European law) in dismissing my UK company.

I believe that if I had a GmbH, the German Tax authorities would have accepted a split income situation, as I would have paid German income tax, and teh GmbH would have paid German corporation tax. If this is indeed the case, then the German Tax authourities should have just collected the corporation tax from my UK company ( which would have been less than the 21% in the UK!).

I have to get our MEP on board and start investigation whether Germany has broken the law. As it stands now I am double taxed.

Anyone else doing a similar investigation?

[BlasterBates]

the exact same problem happened to me.
I am back in the UK now 250,000 Euros lighter and still awaiting a penality. I have now a UK laywer and we have started the process of sueing the German Tax advisor.

In combination with th elitigation, I have now to start investigating if the German Tax authourities were within the law (that is the European law) in dismissing my UK company.

I believe that if I had a GmbH, the German Tax authorities would have accepted a split income situation, as I would have paid German income tax, and teh GmbH would have paid German corporation tax. If this is indeed the case, then the German Tax authourities should have just collected the corporation tax from my UK company ( which would have been less than the 21% in the UK!).

I have to get our MEP on board and start investigation whether Germany has broken the law. As it stands now I am double taxed.

Anyone else doing a similar investigation?

You can run a Ltd in Germany no problem, but you must register it to the German tax authorities.

It is complicated if you do business in the UK and Germany, and it entails setting separate branches, each with separate accounts, p&L. Yes you can split income, but if you do that income must have generated in the country where the branch is. You can't simply tax some of your German income in Germany and some of it elsewhere as that violates the DTA, which is quite explicit in this respect, and outlines the rules of a single company operating in two jurisdictions.

It strikes me that your accountants have completely ballsed it up. There is nothing to stop you challenging the German authorities on your tax, but you need a good accountant. I wouldn't bother dragging them through the European court I would jut get some sound advice from a German accountamt.

And you need to hand in "Objection" "Einspruch" within 30 days of receiving your tax demand, otherwise trying to overturn their decision will be difficult.

The most tax efficient solution in Germany would see you paying around 35% tax on your income.
So you can use that as basis. If you were operating a Ltd they would also be demanding Gewerbesteuer on top. A GmbH actually is not a particularly tax efficient solution, everyone does it as a Freiberufler.

...and good luck

[Dominic]

sham company

Its too late to do much in Germany,
I and myfamiyescaped back to the UK (justliek the Von Trapp family). I paid 150,000 Euro straight away or else I was to be arrested.

It seemed to me that I was dealing with the gestapo, and it will be safer for me and my family to start the fight from the shores of one of the aliance countries.

I still think, and hopefully will be proved correct, that the German Tax authorities have acted illegally. But it is better to argue this point from the UK than in a concentration camp.

As soon as I get some input from our MEP I will let you all know.