Voluntary Tax Disclosure in Germany

Voluntary tax disclosure in Germany, known as a Selbstanzeige, can prevent punishment for tax evasion. It requires more than paying overdue taxes: the disclosure must be complete, statutory barriers must be absent, and required payments must be made on time. The FAQs below provide an introduction. The detailed analysis then explains Section 371 of the German Fiscal Code (AO), the special procedure under Section 398a, and the distinction from corrections under Sections 153 and 378.

1. Legal Nature and Scope of Section 371 AO

Section 371 provides a personal ground for extinguishing criminal punishment. It does not retroactively make tax evasion lawful. Whether an offense was committed, including the required intent and culpability, is a separate question from whether a later disclosure removes punishment for a particular person.

Both perpetrators and participants, including aiders and abettors, may qualify. A properly authorized representative can submit the disclosure. One person’s filing generally does not automatically protect a spouse, another company officer, or a donor or recipient involved in the same transaction. Each person’s position must be assessed, subject to the special third-party protection in subsection (4).

The central cases involve false, incomplete, or omitted tax information under Section 370(1), nos. 1 and 2. A disclosure may also be relevant to attempted tax evasion; withdrawal from an attempt under Section 24 of the Criminal Code may require separate consideration. Failure to use required tax stamps under Section 370(1), no. 3 is not directly covered by the correction wording and requires a separate analysis.

2. Filing with the Tax Authority: Form, Receipt, and Substance

Section 371(1), sentence 1 identifies three corrective acts: correcting false information, completing incomplete information, and supplying information previously omitted. The disclosure must provide the facts needed for taxation. It does not require a particular label or an express admission of criminal guilt. A late or amended tax return may therefore also constitute a voluntary disclosure.

Section 371 itself does not prescribe a special form. Separate filing requirements may nevertheless apply to ordinary tax returns. The content, scope, representative’s authority, and receipt should be documented reliably. The recipient must be a tax authority; the practical course is to file with the competent tax office. Telling a bank, the police, or an adviser alone does not replace that step.

Receipt of an adequate disclosure matters, rather than merely sending it. The relevant person and transactions must be identifiable. An anonymous inquiry does not secure protection. Despite the English term “voluntary,” Section 371 does not require a particular motive or remorse. Fear of future detection does not by itself defeat relief; the statutory barriers remain decisive.

3. Completeness, Tax Type, and the Disclosure Period

The correction must be complete. Under Section 371(1), sentence 2, the general disclosure requirement covers all non-time-barred tax offenses involving the same type of tax, and at least all such offenses within the last ten calendar years. Income tax, VAT, and gift tax must be considered separately. Within income tax, however, a taxpayer cannot simply disclose hidden investment income while leaving intentional omissions of rental income unaddressed.

Ten years is a minimum, not a universal cap or a mechanical reference to ten assessment years. Section 376(1) provides a 15-year criminal limitation period for the specified particularly serious cases. The starting point, interruptions, and suspension rules also matter. Criminal limitation periods differ from the time limits for tax assessments. See our explanation of German criminal and tax limitation periods.

The facts must be sufficiently usable for the authority to establish the correct tax without lengthy independent investigations into the underlying events. Merely identifying an offshore account will generally not be enough. Where records are unavailable, a transparently explained estimate with an appropriate safety margin may be possible. Arbitrary figures are not an adequate substitute for reconstructing the facts.

A preliminary announcement followed by figures later can trigger a statutory barrier in the meantime. That does not mean every supplement is legally impossible: several submissions may work together if the requirements are fully satisfied in time. Preparation should not depend on being able to cure an inadequate filing later. Nor is there a general allowance for errors that taxpayers can freely use. Certain periodic tax filings have a separate statutory regime discussed below.

4. All Statutory Barriers under Section 371(2) AO

Even a complete disclosure fails to provide relief if an applicable exclusion exists. The analysis must address the relevant people and each non-time-barred offense within the required disclosure scope. The exclusions differ in both their triggering conditions and their reach.

No. 1(a): Notice of a tax audit

Notice of an audit order under Section 196 AO may block relief when communicated to a participant, that person’s representative, the beneficiary of the offense, or the beneficiary’s representative. The auditor need not have arrived. The exclusion is limited to the subject matter and periods covered by the announced external audit, so the taxes, periods, and valid notification must be checked.

No. 1(b): Notice of a criminal or administrative-offense investigation

Notification to the participant or representative that such proceedings have been initiated is a separate barrier. An administrative-offense investigation may suffice. A purely internal decision to open an investigation does not itself satisfy this notification requirement, although another exclusion, particularly discovery of the offense, may already apply.

Nos. 1(c)–(e): Arrival of an official

• Tax examination, no. 1(c): Arrival of a tax authority official for a tax examination triggers the relevant exclusion within the subject matter and periods of the external audit.
• Investigation, no. 1(d): Arrival of an official to investigate a tax crime or tax administrative offense is independently relevant.
• Tax inspection, no. 1(e): This includes VAT inspections, payroll-tax inspections, and other inspections authorized by tax law, such as a cash-register inspection. The official must have arrived and identified themselves.

Section 371(2), sentence 2 limits the effects of the audit exclusions in nos. 1(a) and (c): they do not prevent correction of other offenses involving the same tax type outside the audit’s subject matter and periods. This does not authorize arbitrary partial disclosures or eliminate other statutory barriers.

No. 2: Discovery and knowledge of discovery

Two elements must coincide: an offense must already have been discovered, at least in part, when the correction is made, and the offender must know this or reasonably have to expect it based on the circumstances. A general risk of future detection is different from an offense already having been discovered.

Financial data transfers, foreign investigations, information passed between authorities, and suspicious-activity reports may matter. Neither a news report about acquired financial data nor every bank report automatically resolves the issue. The actual information, its connection to the offense, and the individual’s knowledge require assessment.

No. 3: More than EUR 25,000 per offense

Relief under Section 371 is excluded to the relevant extent if the evaded tax or unjustified tax benefit exceeds EUR 25,000 per offense. The figure refers neither to the unreported revenue nor automatically to the total for all years. The unit of an offense depends on the tax, filing obligation, and period involved. Exactly EUR 25,000 does not exceed the threshold. Above it, Section 398a requires separate examination.

No. 4: Specified particularly serious cases

This provision refers to Section 370(3), sentence 2, nos. 2–6: abuse of an official position; exploiting an official’s improper assistance; repeated evasion using counterfeit or falsified supporting documents; specified gang-related VAT or excise-tax evasion; and repeated evasion through concealment using a controlled third-country company. Each category has its own statutory requirements.

The separate “large-scale” category in Section 370(3), sentence 2, no. 1 is not included in that reference. The monetary exclusion under Section 371(2), no. 3 must nevertheless be assessed. Section 398a may also be available where the no. 4 exclusion is the obstacle.

5. Periodic VAT and Payroll-Tax Filings: Subsection (2a)

Section 371(2a) creates an exception for failures to submit complete and correct VAT advance returns or payroll-tax returns on time. Unlike the general completeness rule, a correction can provide relief to the extent of the corrected information. The exclusion based on the EUR 25,000 threshold in subsection (2), sentence 1, no. 3 does not apply to this qualifying correction.

If discovery results precisely from submitting or correcting the relevant return, that discovery does not bar relief under the exception. Other exclusions still require review. These concessions expressly do not apply to tax filings covering the calendar year. However, completing a calendar-year filing does not additionally require correction of advance returns for subsequent periods. The type of filing and the periods must therefore be identified accurately.

6. Payment Requirements and Deadlines: Subsection (3)

If tax has already been understated or an unjustified tax benefit obtained, subsection (3) requires timely payment of the tax evaded for the participant’s benefit. The rule also addresses evasion interest under Section 235 AO, interest under Section 233a to the extent credited against that interest under Section 235(4), and, where applicable, late-payment interest under Article 114 of the Union Customs Code. The statutory crediting rules prevent simply charging the same interest twice.

Payment must meet the reasonable deadline set for this purpose. A tax deferral or suspension of enforcement does not automatically extend the deadline relevant to criminal relief. Funding and any express extension must be addressed in time. Willingness to pay or ownership of illiquid assets does not itself satisfy the condition.

For a person involved in evading someone else’s taxes, the individual’s direct economic benefit must be assessed separately. The payment condition for relief is not identical to every form of tax liability. In the cases covered by subsection (2a), sentence 1, subsection (3), sentence 2 removes timely payment of Section 233a and Section 235 interest as a condition of relief. The underlying tax-law obligation to pay interest may still remain.

7. Section 398a AO: Non-Prosecution with an Additional Payment

Section 398a applies only where relief fails solely because of the monetary threshold or a specified particularly serious case under Section 371(2), sentence 1, no. 3 or 4. It does not cure incomplete disclosure, prior discovery, or notice of an investigation. It provides a statutory route to non-prosecution, distinct from the personal ground for extinguishing punishment under Section 371. It is not an unrestricted negotiated buyout.

Within the prescribed reasonable period, the participant must pay the taxes and interest specified in Section 398a(1), no. 1 and an additional amount to the state treasury:

The bracket determines the rate on the relevant evaded amount; these are not marginal tax bands. For example, EUR 120,000 produces an additional payment of EUR 18,000 if the other conditions are met. The first bracket may also matter below EUR 25,000 if relief is blocked solely by one of the specified aggravated cases. Multiple offenses and multiple participants require separate calculation of the relevant amounts and personal payment obligations.

Subsection (2) applies the calculation principles of Section 370(4), including its restriction on offsetting tax-reducing circumstances. Not every unrelated tax benefit can therefore be deducted. Subsection (3) allows proceedings to be reopened if the authority discovers that the disclosure was incomplete or incorrect. Under subsection (4), the additional payment is not refunded if the intended non-prosecution consequence does not occur; a court may credit it against a criminal fine for tax evasion. These consequences require advance assessment.

8. Section 153 AO: A Duty to Correct, Not Immunity

Section 153 imposes a tax-law obligation. Under subsection (1), it applies in particular when, before the assessment limitation period expires, a taxpayer subsequently actually recognizes that a return submitted by or for them was incorrect or incomplete and that this has caused or may cause a tax shortfall. The provision also addresses the specified tax-stamp cases. The duty extends to legal successors and the persons acting under Sections 34 and 35 AO.

The person’s state of knowledge at the original filing and on later discovery is central. An honest mistake is not tax evasion. However, someone who previously recognized and accepted the possibility of a tax shortfall may already have acted with conditional intent. A later duty to correct may then coexist with the need to meet Section 371. Calling the document a “correction under Section 153” does not settle its criminal-law significance.

For a pure correction case, the error must be reported without culpable delay; justified preparation of the detailed figures may follow. This approach cannot simply be transferred to a voluntary disclosure, where an incomplete first communication may trigger a barrier. Deliberately failing to correct a recognized error can also create a new tax-evasion offense by omission.

Section 153 has additional rules: subsection (2) concerns the later loss of eligibility for a tax concession, subsection (3) intended use of conditionally tax-privileged goods contrary to that condition, and subsection (4) specified consequences of final audit findings for other, unaudited returns. Tax duties must also be coordinated with the privilege against self-incrimination and Section 393 AO where criminal proceedings are involved.

9. Grossly Negligent Tax Understatement: Section 378(3)

Gross negligence is distinct from intent. Section 378(3) provides a separate opportunity to avoid an administrative fine: the person must correct, complete, or supply the information to the tax authority before they or their representative are notified of criminal or administrative-offense proceedings concerning the offense. If tax has already been understated or an unjustified benefit obtained, the prescribed payment must also be made within the reasonable deadline.

The full set of exclusions and the general disclosure scope under Section 371 cannot simply be imported into Section 378(3). Conversely, a taxpayer cannot elect the more favorable rule by merely asserting that they did not know the law. The evidence and the individual degree of fault determine the classification. Section 371(4) applies correspondingly.

10. Third-Party Protection under Section 371(4)

A timely and proper notification required by Section 153 may also protect a third party who previously failed to submit the relevant returns or submitted them incorrectly or incompletely. The express exclusion is prior notification to that third party or their representative of criminal or administrative-offense proceedings concerning the offense.

If the third party acted for their own benefit, the payment requirements in subsection (3) apply correspondingly. Subsection (4) must therefore be examined separately from that person’s own voluntary disclosure. It is not a blanket exemption for everyone associated with a company or a tax return.

11. Gifts, Inheritances, and International Issues

A late gift notification under Section 30 of the Inheritance and Gift Tax Act is not automatically intentional tax evasion. The notification duty, tax liability, possible shortfall, and state of mind must first be assessed. A seemingly simple late notification may nevertheless need to satisfy the disclosure rules. Earlier gifts, exemptions, and the donor’s and recipient’s respective positions matter. See our article on late gift notifications and German inheritance and gift tax.

Heirs do not inherit the deceased’s personal criminal guilt. They may, however, acquire their own correction duties under Section 153 after discovering inaccurate returns. An intentional failure to comply must be assessed separately. Foreign accounts, investments, entities, and residences require coordinated analysis of German tax obligations, attribution, and foreign proceedings. A German voluntary disclosure does not automatically protect against prosecution abroad.

12. Ineffective Disclosures and Remaining Risks

An ineffective disclosure can trigger an investigation or provide evidence. It is therefore not always preferable to every alternative defense strategy. Cooperation and repayment may mitigate the outcome, but there is no fixed discount or guaranteed dismissal. Our historical discussion of ineffective disclosures (German) includes a current explanation of these limits.

Even an effective disclosure does not automatically remove exposure for other crimes, such as forgery, corruption, or applicable money-laundering offenses. Tax liability, professional or disciplinary consequences, and the position of other participants also require independent assessment. The procedural finding that a disclosure is effective, and the documented conclusion of the case, are additional practical matters.

13. Preparing a Voluntary Disclosure

1. Establish the facts: Collect returns, assessments, account records, contracts, and correspondence, and identify the people involved.
2. Identify the applicable procedure: Consider Section 153, Section 378(3), Section 371, and any overlap.
3. Review periods and exclusions: Establish limitation periods, the required disclosure scope, authority actions, and known data transfers.
4. Prepare the correction and funding: Reconstruct the tax facts, assess missing records, and plan taxes, interest, and any additional payment.
5. Manage filing and follow-up: Document representation and receipt, monitor deadlines, and review how the proceedings are concluded.

Rudolph Rechtsanwälte provides German criminal tax advice and defense, including the preparation and assessment of voluntary disclosures and representation when relief is uncertain or unavailable. Contact the firm about a voluntary tax disclosure in Germany. For historical context, our article on the January 2015 reform (German) explains the development of the rules.