Cases of tax evasion are increasingly being uncovered by authorities nationwide and in the media. This does not only concern wealthy or famous individuals; even individuals such as small business owners can be accused of a tax offense.
Especially with tax evasion, it usually takes quite some time until it is uncovered. In many cases, the statute of limitations has already expired. But when does the statute of limitations for tax evasion take effect? In this article, we will explain.
When does tax evasion occur?
Criminal tax evasion generally occurs when false or incorrect information is provided in the tax return or relevant facts are concealed that influence the tax calculation and provide the taxpayer with an advantage (Section 370 AO).
This offense must be committed intentionally; otherwise, it may be an administrative offense. Even the attempted tax evasion is punishable. A conviction for tax evasion can result in up to 10 years’ imprisonment, depending on the severity and circumstances of the act.
Read more about the punishability and sentencing of tax evasion in a separate article.
Tax Evasion: When does the statute of limitations expire?
Especially with the state purchase of tax CDs, the question of the statute of limitations always arises regarding the uncovered acts. In the media, a 5 or 10-year limitation period is often mentioned in general terms, although it is not always immediately clear which type of period is meant and when it begins, and it cannot be said in general terms when tax evasion becomes time-barred. Rather, it depends on the specific act and its punishability, which influences the limitation period. Furthermore, there are different types of statutes of limitations that must also be considered.
As a general rule: The more serious the offense, the longer the limitation period. In the following, we will go into more detail about the individual forms of limitation and their periods.
Important: The correct calculation of the statute of limitations is important for the completeness and accuracy of a voluntary disclosure. Only then does it have a debt-discharging effect. This requires that all years that are not yet time-barred under criminal law are corrected and correctly submitted. The further back the tax office can reach into the past through amended tax assessments, the higher the tax to be repaid, with back-tax interest (6% per year) for previous years being particularly noticeable. If there are errors here, a conviction remains easily possible despite voluntary disclosure. For a reliable calculation of the applicable periods, you should therefore always consult an experienced and specialized lawyer to exclude the risk of (self-) incrimination through voluntary disclosure. |
Statute of limitations for criminal prosecution of tax evasion
The term statute of limitations, which is often used in common parlance, frequently refers to the so-called statute of limitations for criminal prosecution. After this limitation period has expired, a criminal offense may no longer be prosecuted or penalized, meaning that investigative authorities must terminate the proceedings because a procedural obstacle exists.
In cases of tax evasion, there are various limitation periods:
- Simple tax evasion generally becomes time-barred after 5 years (Section 78 (3) No. 4 StGB);
- Depending on the level of the penalty in the specific individual case, a statute of limitations may only take effect after 10 years;
- In particularly serious cases (Section 370 (3) No. 1-6 AO), the statute of limitations can be up to 15 years since 2020 (Section 376 (1) AO) [Note: At the end of 2008, the legislator introduced stricter regulations for the statute of limitations for criminal prosecution in Section 376 AO and tightened them again as of the deadline of July 1, 2020.];
- In any case, the so-called assessment period must also be observed – according to Section 169 (2) sentence 2 AO, this is ten years.
The limitation period always begins to run when the tax evasion is completed and concluded. In the case of income tax, for example, this is the date of the income tax assessment.
| Attention: If an official measure such as an interrogation or a search occurs, the period is interrupted. It then begins to run again from a later point in time. In individual cases, the total limitation period can therefore be a maximum of up to 42.5 years according to the current legal situation. |
Statute of limitations for tax assessment in tax evasion cases
If criminal proceedings occur, the statute of limitations for assessment also plays a decisive role. This determines how long the tax office has to assess the tax back payments to be made and to issue a tax assessment.
The assessment period can also vary and depends on the individual case (Section 169 (2) sentence 2 AO):
- In the basic case (without a criminal offense), the assessment period is 4 years;
- In the case of reckless tax reduction, the period increases to 5 years;
- In the case of simple or serious tax evasion, it is 10 years.
The period begins at the end of the calendar year in which the taxes were incurred. If a tax return was filed, the end of the calendar year of the tax return counts as the start of the period. If a tax return was unlawfully not submitted, the start of the period is postponed to the end of the 3rd calendar year after the taxes were incurred.
Here, too, there are suspensions of expiration that allow the period to continue. These include, for example, an objection or a tax audit. Such suspensions of the period should be checked by a tax defense lawyer if you receive a tax assessment, as you are not obliged to settle time-barred claims.
Statute of limitations for payment in tax evasion cases
Payment limitation is a type of statute of limitations for enforcement and refers to the period in which the tax office can assert enforcement of the assessed taxes, for example through seizure (Section 228 AO). The payment limitation period for tax evasion is 10 years and begins when the claim becomes due.
Do I have to pay back taxes despite the statute of limitations?
Whether taxes must be repaid depends on which limitation periods exist and which do not. As explained above, it is essential to distinguish between the individual limitation periods. This can result in quite different limitation periods for criminal prosecution and tax assessment.
| An example: The intentionally incorrect income tax return for the 2009 calendar year was submitted in 2010. The income tax assessment is served on August 1, 2010. The statute of limitations for criminal prosecution thus begins on August 1, 2010, and ends on August 1, 2015. The tax assessment period, however, only begins on January 1, 2011, and ends on December 31, 2020 (depending on the offense). If tax evasion is uncovered between 2015 and the end of 2020, a tax back payment must be expected in this case, but not criminal prosecution. |
For binding information and a legal assessment of your individual case, please contact a lawyer for tax and/or criminal law – we would be happy to help!
How can a lawyer help with tax evasion?
Before a voluntary disclosure is sought, the correct period in which tax evasion has not yet become time-barred should always be determined. This can be complicated in individual cases.
A detailed examination of the existing criminal offense is necessary here to determine which limitation period applies. So-called interruptions or suspensions of the limitation period must also be taken into account in the calculation and require legal expertise. Even in the case of an accusation of tax evasion, it is advisable to contact a defense attorney and request access to the files.
As an experienced law firm in criminal law, we support you throughout the entire process and check exactly whether the allegations against you still stand or are already time-barred. Depending on the result, we can then set up a suitable defense strategy and represent you in the best possible way.
As experienced criminal defence lawyers, we have already been able to achieve early discontinuation of proceedings, a reduction in sentence or an acquittal for many clients. We will be pleased to support you legally in the event of an allegation and provide comprehensive advice on a possible defence strategy. Arrange an initial consultation with us at any time.
