The German tax authorities have now issued the long-expected decree about inter alia, the differentiation between the scopes of the correction of simple mistakes on the one hand and of penal legal matters on the other (including but not limited to the voluntary self-disclosure for exemption from punishment). The decree deals with matters such as the question of whose knowledge of a mistake is decisive, when a return, etv, is considered objectively incorrect, and under which conditions, as a general matter, intentional and grossly negligent action can be assumed. Also, it deals with the scope of corrections, the persons obliged to correct mistakes, and the timescale in which corrections ought to be made. An internal control system may contribute to the assumption that, in a given case, failure to comply with the tax obligation was neither intentional nor grossly negligent. The decree became necessary particularly due to the fact that the scope of valid voluntary self-disclosures was reduced more and more over recent years. It may be advisable to seek professional advice, since this legal matter requires in-depth knowledge of substantive, formal and criminal tax law. In addition, it should be noted that the decree is considered as an instruction about the interpretation of the corresponding provision in the General Tax Act, which is not binding for the courts.
Source: BMF decree of May 23rd 2016, available at http://www.bundesfinanzministerium.de/ (in German only).
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