Red alarm level: Tax fraudsters use new law as a loophole!

Red alarm level: Tax fraudsters use new law as a loophole!

A new law on bureaucracy relief will be in the Federal Council on Friday after the Bundestag has already approved at the end of September. Officially, it should aim to free companies from excessive bureaucracy. But the 46-page document poses a sensational regulation for many sensational regulation that could potentially give significant advantages. This regulation could lead to the state and its honest taxpayers suffer enormous financial damage due to the loss of important evidence.

The Cologne prosecutor Anne Brorhilker, who has made a name for years in the investigation of tax evasion, is concerned: "The new law would make the work of law enforcement authorities and tax offices almost impossible." She speaks of a regulation that could make banks possible to "almost legally destroy" evidence. If the law comes, it would be allowed after eight years - two years earlier than before.

Fear of the extermination of evidence

An extremely explosive topic are the so-called cum-cum deals, a fraud stitch that works similarly to the more well-known cum-ex deals. This type of tax evasion has already led to legal consequences for several bankers. Christoph Spengel, a financial scientist from the University of Mannheim, estimates that the state has lost considerable 25 billion euros from such machinations since 2001.

A decisive problem with the new legal regulation is the premature destruction of evidence. In cases of particularly severe tax evasion, the limitation period has recently been extended to 15 years, but there are concerns that evidence that is necessary to clarify these offenses can be shredded long before this period has expired. This could severely hinder the efforts of the tax offices and make the fight against tax fraud considerably more difficult.

The Federal Government justifies the changes with the assumption that many companies still have to keep their documents in paper form and pay for expensive storage space. A saving of 595 million euros is the rather scarce estimate. However, this assumption could prove to be illusory, since most companies have now switched to digital storage systems, which could reduce the actual savings to just "around 12 euros per company" if you take into account the necessary server capacity.

observers already see parallels to the traffic lights, which are sold as part of this mere bureaucracy relief. Ultimately, it remains to be seen whether the law actually brings the hoped -for relief, or whether it can be seen as a free ticket for criminals. The developments in this matter are of great importance in any case, since they could strongly influence the state efforts to combat tax fraud.

The concerns are not unfounded, and the planned law could have profound effects on the work of the tax authorities and the integrity of the tax system itself. The background to these developments, which are also discussed in public, can be found DetailsOrtKöln, Deutschland