TAX RISKS – HIGH PENALTIES
As part of the tax declaration, ie the submission of tax returns, companies are faced with ever-increasing requirements. For both, the jurisprudence and the requirements of the tax authorities have tightened significantly in recent years. Even minor mistakes in the filing of tax returns can lead to criminal proceedings for intentional tax evasion. In particularly severe cases, the law provides sentences of up to 10 years in prison. In addition, fines of up to EUR 1 million may be imposed in an administrative offense case, in case of a criminal conviction. Affected parties are, in particular, the representatives, ie the executive board and management, as person responsible for the fulfillment of the tax obligations of a company.
In a letter dated 23.05.2016, the Federal Ministry of Finance (BMF) commented on this field of tension: “If the taxpayer has set up an internal control system that serves to fulfill the tax obligations, this may be an indication against the existence of a taxpayer Intent or frivolity, but this does not release from examining the individual case. ”
TAX COMPLIANCE – SOLUTION AND “DUTY”
With the mentioned letter of May 23, 2016, the BMF has pointed out to the companies respectively their managers a way of avoiding criminal tax risks by implementing an internal control system. Thus, so-called Tax Compliance Management Systems have gained crucial operational importance. Through organizational and control measures, they ensure that all tax obligations of a company are properly fulfilled. Although the BMF has made no regulations for the design of such systems, the Institute of Public Auditors (IDW) has published a practical note on the design and audit of a Tax Compliance Management System in accordance with IDW PS 980. This practical note thus represents the current standard for the requirements of a Tax Compliance Management System.
Our specialists support you in the implementation of a Tax Compliance Management System in accordance with the requirements of the IDW PS 980. The implementation of these requirements takes place individually, based on the size and structure of your company. The smaller the company, the more manageable the Tax Compliance Management System and the effort for its implementation. Due to the possibility of a release from criminal liability, such a system is also recommended for medium-sized companies.
Together with you we determine and assess your tax risks and work out an individual concept of measures, internal structures and controls to avoid these risks. Upon request, our specialized auditors certify the introduced Tax Compliance Management System; this represents an additional argument against criminal prosecution.
Our specialised tax lawyers and tax accountants will advise you all-embracingly. Please contact us and we will discuss your options!