Does the tax office have an overview of my bank accounts?
The fairy tale of banking secrecy is increasingly giving way to the fear of the transparent bank customer. It is a fact that credit institutions in Germany commit themselves under civil law not to disclose customer-related data to third parties. Nevertheless, in some cases banks must disclose their customers’ account data to the investigating authorities.
If a bank customer is a defendant in criminal tax proceedings, the investigating authority may request information about customer-related account information from the bank. The Bank may not refuse to surrender customer data. It is obliged to provide information.
If a bank customer dies, the bank must notify the tax office of account or custody account holdings with a total value of more than EUR 5,000.00. The same applies to a safe deposit box maintained at the bank. The notification must be made within one month of becoming aware of the death.
Even if there is no suspicion of a criminal offence, tax authorities are entitled to carry out an automated retrieval of account information, for example to determine income from capital assets and private sales transactions.
The names of the account holder, the account number and also the account opening and closing dates are disclosed, but not account balances or movements.
Not only the tax authorities are entitled to information, but under certain conditions also the employment agency, social welfare offices or city administrations.
The automated retrieval does not take place at the bank itself, but at the Federal Central Tax Office, where the account data are stored. The bank is not informed of the automated retrieval, but the person concerned is informed of it with the next tax assessment notice.
In recent years, the possibilities of German tax investigators having access to foreign bank accounts have been discussed with particular attention.
Swiss banks in particular are afraid that so-called group enquiries could arise. The form in which data will be exchanged with Switzerland in the future is still controversial in detail. What is certain is that there will be expanded communication and an opening of the flow of information. The same applies within the EU, in particular to Luxembourg and Austria. From 2015, an automatic exchange of information on interest income with German authorities can be expected in these countries.
Many foreign – especially Swiss – banks are urging their customers to provide evidence of the taxation of their capital income and custody account profits. In other words: German customers are in fact forced to submit voluntary declarations that are exempt from punishment. Otherwise there is a risk of customer relations being terminated. Sometimes cheques are offered or the possibility is given to “park” the money provisionally on a current account which does not yield any income – and thus also does not cause any tax liability.
When an advisor or a bank claims they can predict the future, it is usually about as serious as fortune-tellers reading crystal balls. Therefore, reports about future developments should usually be treated with caution. In 2013, for example, the tax agreement between Germany and Switzerland, which ultimately failed to materialise, was still the subject of heated debate.
The extent to which the fears of many customers that their accounts abroad might be discovered are justified can usually only be said on a case-by-case basis. In addition to the risk of discovery, the personal life situation of the individual must be kept in mind. In many cases, a voluntary tax declaration is the right way to go. However, due to the many formal hurdles that arise, it is not always the only way to eliminate tax sins from the past.