29. Jul 21

Turkey shares financial data – Tax dodgers should consider submitting a voluntary declaration

The automatic exchange of financial information is supposed to assist countries in their efforts to tackle cross-border tax evasion. Turkey is now among the countries that share information with the German tax authorities.

The automatic exchange of information is a powerful weapon in the fight against cross-border tax evasion. More than 100 countries are party to the international agreement, which sees the signatory states mutually exchange financial information relating to their taxpayers who have accounts abroad. Among the signatories are former tax havens such as Switzerland. Following quite a bit of back and forth, Turkey is now also among the countries that share information with the German tax authorities. This means that untaxed income in Turkish accounts will no longer be hidden from the German authorities.

Anyone who is liable to pay taxes in Germany and fails to declare income from foreign accounts, for example in Turkey, is committing tax evasion. We at the commercial law firm MTR Rechtsanwälte note, however, that it remains possible to submit a voluntary declaration for tax evasion, which can potentially lead to immunity from punishment.

The first transferal by Turkey of financial information pertaining to individuals living in Germany with one or more accounts in Turkey was supposed to have already taken place in late 2020. Following delays, information was set to flow freely as of June 1, 2021, with President Erdogan signing a decree to this end.

In addition to names, addresses, birth dates, account numbers, and tax identification numbers, other information shared as part of the automatic exchange of information includes account balances and income from returns on capital. As a result, untaxed income from capital in foreign accounts can no longer be concealed from the tax authorities. One possible solution is to submit a voluntary declaration for tax evasion, with this potentially leading to immunity.

That being said, the declaration needs to be complete and have been submitted on time, i.e. before the tax evasion is discovered by the authorities. That is why those concerned should not wait much longer if they want to submit a voluntary declaration. For the declaration to be complete it needs to include all tax-relevant information from the past ten years. Even minor errors can render a voluntary declaration incapable of leading to immunity, though it may still have a mitigating effect similar to a confession.

Lawyers with experience in the field of tax law know what information needs to be included in the voluntary declaration and can prepare the latter in a manner that ensures that it will be effective.

For more information:

https://www.mtrlegal.com/en/legal-advice/tax-law/voluntary-disclosure.html

Do you have any questions?
Make an appointment at one of our locations in Cologne, Berlin, Dusseldorf, Frankfurt, Hamburg, Munich or Stuttgart!