Voluntary disclosure for tax evasion: Definition, purpose, and legal significance
Voluntary disclosure under § 371 of the Fiscal Code as a ground for exemption from punishment
Voluntary disclosure is a central instrument in German tax criminal law that allows taxpayers to retrospectively disclose committed tax offenses – particularly tax evasion – to the tax office. It is regulated under § 371 of the Fiscal Code (AO) and represents a so-called ground for exemption from punishment. This means: anyone who makes an effective voluntary disclosure and fully repays the evaded taxes can, under certain conditions, achieve immunity from prosecution and avoid criminal proceedings. The law distinguishes between simple and serious tax evasion, each having different legal consequences and statutes of limitations.
Purpose of voluntary disclosure: Return to tax legality
The purpose of voluntary disclosure is to promote tax honesty and give the state the opportunity to retrospectively collect evaded taxes. It forms a bridge between the state’s interest in full tax collection and the offender’s interest in avoiding punishment for tax evasion. Tax offenses such as tax evasion have significant criminal consequences, which is why voluntary disclosure plays an important role in avoiding and prosecuting such crimes. Thus, the immunity-granting voluntary disclosure is a crucial way to enable the return to tax legality and mitigate the consequences of tax reduction.
Who can make a voluntary disclosure
Through voluntary disclosure, both individuals and companies have the opportunity to correct their information on non-time-barred tax offenses of a tax type within the last ten calendar years and thereby achieve immunity from punishment. The prerequisite is that the declaration is complete and timely, and all relevant information on the affected tax types is provided. The criminality due to tax evasion is only waived if the conditions of the voluntary disclosure are met and the act has not yet been discovered. The goal is to strengthen trust in the tax system and sustainably promote tax honesty.
An effective voluntary disclosure is only present if all incorrect or incomplete information is corrected or supplemented so that the tax assessment can be made correctly.
Immunity-granting voluntary disclosure for tax evasion: Conditions, procedure, and risks
NRW intensifies fight against tax evasion through data purchase
North Rhine-Westphalia is making no concessions in the fight against tax evasion. As the State Office for the Fight against Financial Crime (LBF NRW) announced on December 11, 2025, it has purchased a comprehensive dataset with customer information from tax havens like the United Arab Emirates, Panama, the Cayman Islands, and others. Tax offenders still have the opportunity for immunity-granting voluntary disclosure.
Tax evasion is a criminal offense under § 370 AO and is subject to criminal law. Prosecution can lead to the initiation of criminal proceedings, where the offender faces a fine or imprisonment of up to five years. In particularly serious cases of tax evasion, the prison sentence can even be up to ten years. Criminal responsibility lies with the respective responsible offenders, and attempted tax evasion is also punishable. The impact of a conviction is both legal and financial. In addition to criminal consequences, non-criminal measures such as disciplinary proceedings against public officials or professionals can also be initiated.
New offshore tax havens in the focus of tax investigators
Former tax havens like Switzerland or Liechtenstein have been dried up in recent years. They have been replaced by other countries, mostly outside Europe. However, even with undeclared income in accounts, for example in Panama or Singapore, tax offenders cannot feel secure, as the current data purchase by the LBF NRW shows. Upon conviction of tax evasion, severe sanctions ranging from fines to prison sentences threaten. A financial authority official can appear for a tax inspection; in such cases, voluntary disclosure is excluded. Voluntary disclosure cannot lead to immunity if an official has appeared for a tax inspection. However, an immunity-granting voluntary disclosure can still pave the way back to tax legality for tax offenders, says the business law firm MTR Legal Attorneys, which among other things advises on tax criminal law and the creation of an effective voluntary disclosure.
Conditions and procedure of an immunity-granting voluntary disclosure
The prerequisite for a valid voluntary disclosure under § 371 AO, § 370 AO, § 398a AO, § 235 AO, and § 1 AO is that all incorrect or omitted information on non-time-barred tax offenses of a tax type from the last ten years is completely corrected, supplemented, or made up for. The voluntary disclosure must be designed so that the tax office can set the tax correctly without further investigations. It also includes the timely and complete submission of the tax return. Evasion interest at 6% per year under § 235 AO must be paid on time to gain immunity from punishment. Immunity only occurs if the evaded taxes are paid within a deadline set by the tax office. The amount of the evaded taxes is decisive for the payment modalities and the calculation of any surcharges or monetary penalties in the context of the voluntary disclosure. The voluntary disclosure is excluded if the shortened tax amount exceeds 25,000 euros per offense or if there is a particularly severe case. The importance of the No. in the legal provisions (e.g., § 371 Abs. 2 No. 1 AO) must be observed here. The voluntary disclosure is a personal ground for exemption from punishment that only applies to the committed tax evasion and can also lead to impunity even if one has intentionally assisted in tax evasion. The effects of a voluntary disclosure are both legal and financial in nature and increase legal certainty for the taxpayer. The performance of the repayment and the role of the tax authority in setting the taxes and interest are crucial. According to § 371 Abs. 3 AO, the voluntary disclosure is only effective if all conditions are met and no grounds for exclusion exist.
Voluntary disclosure is a complex process that harbors numerous pitfalls. It is therefore advisable to enlist a specialist lawyer for tax law to correctly design the connection and relationship between the taxpayer and the tax authority when submitting the voluntary disclosure and to gain legal certainty.
LBF NRW purchases offshore data: Tax evasion increasingly in focus
Which countries and offshore service providers are affected
According to the LBF NRW, a data carrier with customer information from service providers based in the United Arab Emirates, the Cayman Islands, Hong Kong, Mauritius, Panama, Singapore, and Cyprus has been purchased. These service providers assist their clients in setting up foreign companies in low-tax areas. These companies are intended to hide taxable income from the German tax authorities.
The LBF NRW has now acquired a comprehensive data set with information on foreign companies and the responsible individuals. As the state office reports, the dataset contains valuable information on the shifting of assets into offshore tax havens. This information is now being processed and then made available to the respective authorities in the other federal states and abroad.
Tax evasion: What fines and prison sentences threaten
The recent data purchase shows that the tax investigators are intensifying their fight against tax evasion. For tax offenders, this means they should act promptly if they wish to avoid high fines or prison sentences. For tax evasion, there is a threat of a fine or imprisonment of up to five years; in particularly severe cases of tax evasion, the prison sentence can be up to ten years. Criminal responsibility lies with the respective responsible offenders, and attempted tax evasion is also punishable. If a criminal or administrative fine proceeding is initiated, criminal measures such as house searches, arrests, police summonses, or indictments by the public prosecutor’s office can follow. One way can be an immunity-granting voluntary disclosure. However, voluntary disclosure can only have an immunity-granting effect if it is submitted on time and is complete. Voluntary disclosure is excluded if the shortened tax amount exceeds 25,000 euros per offense or if there is a particularly severe case. The tax advantage and the amount of the evaded amount have direct effects on the possibility of voluntary disclosure.
Timeliness of voluntary disclosure and blocking reasons
Timeliness means that the voluntary disclosure must be submitted before the tax evasion is discovered. Because there must not be a so-called blocking reason for the voluntary disclosure. This is the case, for example, if the offense has already been discovered by the tax authorities or if the taxpayer had to at least expect discovery. A voluntary disclosure is ineffective if the tax evasion has already been discovered and the taxpayer knew or had to anticipate it. This does not automatically apply just because a dataset has been purchased; affected parties should, however, act promptly. The voluntary disclosure serves to avoid tax offenses or to avert their criminal prosecution and is a central instrument of tax criminal law enforcement.
Completeness of the voluntary disclosure: No salami tactic
Completeness means that the voluntary disclosure must contain all incorrect or omitted information on non-time-barred tax offenses of a tax type from the last ten years. A clean slate must be made with the tax authorities. A salami tactic is of no help here and can lead to the voluntary disclosure not having an immunity-granting effect. The evasion interest at 6% per year must also be paid on time to achieve immunity from punishment. Immunity only occurs if the evaded taxes and interest are paid within a deadline set by the tax office. The voluntary disclosure is a personal ground for exemption from punishment that can even lead to impunity if one has intentionally assisted in tax evasion. Timely and complete submission of the tax return is crucial, as the tax authority sets the taxes and interest, and the payment must be made on time.
High demands on voluntary disclosure: Completeness, deadlines, repayment
Obligation to repay and evasion interest
Furthermore, the tax offender must also be able to fully repay the evaded taxes and the evasion interest at 6% per year according to § 235 AO within a deadline set by the tax office. Immunity only occurs if both the evaded taxes and the interest are paid on time. If the shortened tax amount per offense is higher than 25,000 euros or if there is a particularly severe case, the voluntary disclosure is excluded according to § 371 Abs. 2 AO.
The legal regulations under § 371 AO, § 370 AO, § 398a AO, § 235 AO, and § 1 AO require that an effective voluntary disclosure completely corrects, supplements, or makes up for all incorrect or omitted information on non-time-barred tax offenses of a tax type from the last ten years. The correction must encompass all relevant amounts and tax advantages so that immunity from punishment under criminal law occurs. The voluntary disclosure is a personal ground for exemption from punishment and only applies to the committed tax evasion.
Furthermore, the legislator has set high standards for a voluntary disclosure to have an immunity-granting effect. Even small errors can lead to immunity not occurring. It can at least have a mitigating effect then.
Specialist lawyer for tax law: Support with voluntary disclosure
To avoid errors that lead to the ineffectiveness of the voluntary disclosure, it should not be created on one’s own. Voluntary disclosure is a complex process that harbors numerous pitfalls. It is advisable to seek expert support from a specialist lawyer for tax law and attorneys experienced in tax criminal law. Due to the complexity and strict requirements for the correction and declaration of all relevant data, advice from a specialist lawyer for tax law is particularly important. They know which information a voluntary disclosure must contain and which formal requirements must be fulfilled to make the voluntary disclosure effective.
An effective voluntary disclosure must include all incorrect or omitted information on non-time-barred tax offenses of a tax type and be designed so that the tax office can set the tax correctly without further investigations. The complete and timely submission of the tax return and close cooperation with the tax authority are crucial for the effectiveness of the voluntary disclosure.
The voluntary disclosure remains a viable way to avoid punishment for tax evasion. Furthermore, voluntary disclosure can help avoid embarrassing and burdensome searches, seizures, and other measures if it is made before they are initiated.
MTR Legal Attorneys have extensive experience in tax criminal law and in creating an effective voluntary disclosure.
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