End of the Penalty-Free Voluntary Disclosure in Sight?

Federal Finance Minister Wants to Limit Immunity in High Tax Evasion Cases

At the end of April 2026, it was announced that Federal Finance Minister Lars Klingbeil seeks to reform the penalty-free voluntary disclosure in cases of tax evasion. According to the considerations made public so far, a voluntary disclosure in the case of high evasion amounts should no longer lead to immunity from prosecution, but only be considered as a mitigating factor.

Important: The current legal situation still applies. A penalty-free voluntary disclosure according to § 371 of the Fiscal Code (AO) is still generally possible – but only if all legal requirements are precisely met.

Voluntary Disclosure Only a Mitigating Factor in the Future?

The penalty-free voluntary disclosure is an instrument of tax criminal law that aims to allow taxpayers to return to tax compliance if they catch up on complete information and pay the evaded taxes in a timely manner. This principle is politically under pressure. The background to the reform considerations includes the argument that the current regulation may incentivize initially not disclosing and only reacting at the moment of impending discovery.

Whether a reform will come, from which amounts it would apply, and what transitional provisions might look like is currently open. As long as there is no legislative change, the current requirements for an effective voluntary disclosure apply.

Context: Measures Against Tax Crime

The considerations regarding voluntary disclosure are discussed in connection with a broader package of measures to combat tax crime – such as closer cooperation between authorities, data-based evaluations, and a central whistleblower system. Such developments increase the risk in practice that facts may already be known to tax authorities, so that a voluntary disclosure can no longer result in immunity from prosecution.

Current Legal Situation: What an Effective Voluntary Disclosure Requires

The penalty-free voluntary disclosure is particularly regulated in § 371 AO. It does not automatically lead to immunity from prosecution. Even formal or substantive errors can cause the entire effectiveness to fail – resulting in the initiation of a tax criminal proceeding.

Typical Core Requirements Are:

1) Complete Correction for a Tax Type

The voluntary disclosure must generally be complete. This means: For the affected type of tax, all unexpired tax offenses must be fully corrected. Since the reforms of recent years, “partial disclosures” carry a high risk of being invalid overall.

Practical Example: Those who have not declared capital gains from foreign assets must regularly review and report all relevant years and all affected accounts/deposits in full. Missing documents, estimates without a solid basis, or omitting individual periods can jeopardize the voluntary disclosure.

2) No Obstructive Reasons: The Offense Must Not Be “Discovered”

A voluntary disclosure is excluded if there are so-called obstructive reasons. In practice, it is particularly relevant whether the offense has already been discovered or whether the person concerned could anticipate that the tax authorities are or will become aware of it.

The circumstances that often act as obstructions include, among others:

• Audit orders (e.g., tax audits) and their scope,
• Initiation/announcement of tax criminal investigations,
• Existing control notifications, data transmissions, or third-party hints,
• Requests/inquiries from the tax administration with a specific reference to the matter.

When exactly a “discovery” occurs is a case-by-case question and depends on what information the tax authority already has and how clear it is.

3) Timely Repayment: Tax, Interest, and Possibly Surcharge

For immunity from prosecution to apply, evaded taxes must be repaid within the set deadlines. In addition, there are usually evasion interest under § 235 AO (regularly 6% per year).

Moreover, for evasion amounts exceeding 25,000 euros per offense – despite voluntary disclosure – a regular additional cash payment (“surcharge”) is required under § 398a AO to achieve a penalty-free effect. The amount of the surcharge depends on the extent of the evasion and is legally tiered.

4) Form and Content: Clear, Verifiable Information

A voluntary disclosure must be designed so that the tax administration can easily comprehend the tax bases. Therefore, structured, complete information and appropriate evidence (e.g., bank statements, earnings statements, contracts) are regularly required. Unclear, contradictory, or unverifiable information poses significant risks.

What Might Change in a Reform

If the legislature implements the plans, the voluntary disclosure for higher evasion amounts could only act as a mitigating factor in the future. This would mean: Full disclosure and payment obligations would likely remain relevant, but the prospect of immunity would vanish in particularly serious cases. As a result, the strategic importance of the right timing would increase further, as the benefit of the voluntary disclosure is already significantly limited in cases of impending discovery or incomplete preparation.

Conclusion: Time factor and completeness are crucial

Currently, the voluntary disclosure leading to exemption from penalty is still possible. In light of the reform discussions and the increasing amount of data available to authorities, the time factor can be especially crucial: If the offense has been discovered or a reason for exclusion applies, immunity from penalty is generally ruled out. Likewise, an incomplete or incorrect declaration can cause the entire voluntary disclosure to fail.

Those considering a voluntary disclosure should therefore have it checked early on whether (1) there are no grounds for exclusion yet, (2) all affected periods can be fully accounted for, and (3) the additional payment including interest and surcharge is feasible.

MTR Legal Attorneys advise on criminal tax law as well as the preparation and submission of a voluntary disclosure.

Please feel free to contact us!

Note: This post is intended for general information purposes and does not replace individual consultation. The legal evaluation always depends on the specific individual case.