Germany: Self-disclosure rule amendments bring good and bad news for corporates

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2026

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Germany: Self-disclosure rule amendments bring good and bad news for corporates

welbers.jpg

Hartwig Welbers

Self-disclosure allows tax evaders to avoid prosecution by coming forward of their own volition and paying the tax evaded. In principle, this opportunity is to be retained, although many believe that the current rules need to be tightened. The Ministry of Finance has now published draft amending legislation to that end. This subject is relevant to corporates in respect of their mass data filings of monthly VAT and payroll withholding. Because it is not easy for the authorities to distinguish between an error and a wilful attempt to defraud, there is a growing tendency to see corrected returns as failed self-disclosures (because they often cannot meet all the formal requirements) and to open criminal proceedings. The new ministerial draft now published tackles this issue by re-introducing partial self-disclosure for monthly or quarterly VAT or payroll withholding tax returns. A corrected return will not fail in respect of the corrections.

The bad news is that the tax audit preclusion of self-disclosure is to be tightened. Up to now, self-disclosure is no longer possible once a tax auditor sets foot on the premises. This point in time is to be brought forward to the notification to the company of the coming audit and audit concept is to be extended to include VAT, withholding tax and other specifically targeted reviews and examinations. The implications of this on very large corporations with a tax auditor more or less permanently in residence remain, however, open.

The Ministry of Finance does not see the new rules as burdensome on compliant businesses. This, however, overlooks the reality of the effort needed to prepare and substantiate a self-disclosure statement of more than errors in monthly or quarterly VAT or payroll withholding tax returns, say, to protect corporate officers from prosecution for having taken a risky position. This is, in particular, true as the limitations period will be extended to 10 years. One also needs to bear in mind the continuing discussion on a possible corporate criminal law to sanction a corporation for wrong-doing, rather than just the employees acting on the company's behalf. All things considered, effective supervision of a company's compliance is becoming more and more essential.

Hartwig Welbers (hartwig.welbers@de.pwc.com)

PwC

Tel: +49 711 25034 3165

Website: www.pwc.de

more across site & shared bottom lb ros

More from across our site

Long-running, high-value and complex enquiries are a significant reason for HM Revenue and Customs’s increased TP yield, experts suggest
Landmark legal updates in India have led companies to prioritise specialised tax advisers over accountants, ITR has found
Brazil’s shift to a nationwide consumption tax is more than conceptual; it fundamentally transforms municipal revenue, enforcement, and administrative disputes
While some advisers praised the ruling’s definition of a ‘voucher’ for VAT purposes, a UK partner said the case left unanswered questions
While pillar two has been enacted on paper in Brazil, companies are encountering a range of practical compliance issues, ITR has heard
Moore, founding partner of the Chicago tax boutique which bears her name, shares her career wisdom for ITR’s new Women in Tax interview series
But partners at the firm admit that jumping ship to the US would not be as easy as some believe
Governments are rewriting tax policy for the AI era, deploying digital taxes, tailored incentives and algorithmic enforcement that redefine where value is created
Wingrove will succeed Bill Thomas, who has served in the role since 2017; in other news, Andersen unveiled a sharp increase in revenues for 2025
Partners are divided on Italy vs PDM D’s analytical depth, evidentiary standards, and what the judgment signals for future intra-group financing cases
Gift this article