Tax evasion according to § 370 of the German Fiscal Code (AO) is the central criminal provision in tax criminal law.The regulation is intended to protect the public interest in the timely and complete collection of taxes (Federal Constitutional Court, decision of 29 April 2010 – 2 BvR 871/04)
Under criminal law, not only incorrect but also incomplete information provided to the tax office is particularly relevant – for example, if income received is not reported. When considering tax law, the relevant tax regulations must always be taken into account. Only those who actually evade taxes or obtain unjustified tax advantages can be prosecuted for tax evasion.
The charge of tax evasion applies to all industries and every taxpayer – regardless of whether they acted as a private individual or as someone responsible for a company.
In suitable cases, an effective self-report can be a crucial step towards obtaining immunity from prosecution.
Tax evasion – when does it constitute a crime?
The offense of tax evasion according to § 370 AO is committed by anyone who provides incorrect or incomplete information to the tax authorities or other authorities regarding tax-relevant facts, unlawfully fails to inform the tax authorities about tax-relevant facts, or unlawfully omits the use of tax stamps or tax labels in order to reduce taxes or obtain unjustified advantages.
The act can be committed both through active conduct and through omission, and is punishable even in the attempt.
Intentional conduct is required for all variants of the offense. The perpetrator must have the understanding or knowledge that he is fulfilling the elements of the criminal offense and must also intend to do so.
If intent is lacking, negligent tax evasion (§ 378 AO) may be considered. This is not a criminal offense, but constitutes an administrative offense.
Typical examples include incorrect or incomplete information provided to the tax office in tax returns or tax declarations.
Only natural persons are criminally liable. Legal entities such as a UG, GmbH, or AG cannot themselves be perpetrators of tax evasion; the responsible parties are the bodies acting on behalf of the company, such as its managing directors and board members.
Tax evasion does not occur if someone merely benefits from an error or mistake by the tax authorities without having acted unlawfully themselves. The taxpayer is not obligated to correct errors made by the tax office if the tax office has received the necessary information through the tax return (Federal Fiscal Court, judgment of December 4, 2012, VIII R 50/10).
How is tax evasion detected?
The risk of detection for tax evasion is increasing due to digitalization, various (international) reporting obligations, and intensified enforcement by financial and investigative authorities in certain areas. Since the beginning of 2026, for example, cryptocurrency exchanges have been required under the EU Directive on Administrative Cooperation in the Field of Taxation (DAC8) to report user data and transactions to tax authorities. One of the aims of these new rules is to make tax evasion more difficult and to better track profits from cryptocurrencies.
Information exchange between tax offices can also lead to the detection of tax evasion if assets or income have not been properly declared. Data theft or the purchase of tax data ("tax CDs") also plays a role.
Risks also exist in inheritance cases if untaxed assets are discovered during estate settlement and heirs are confronted with the tax consequences.
Furthermore, banks, for example, are obliged to report suspicious cash deposits or transactions as part of money laundering prevention measures, which can also lead to the discovery of tax-related matters.
What are the penalties for tax evasion?
The German Fiscal Code (Abgabenordnung) provides for prison sentences of up to five years or fines for tax evasion according to § 370 para. 1 AO.
In particularly serious cases – such as significant tax evasion or the use of forged documents – the penalty can even be up to ten years imprisonment.
The actual penalty depends on the specific circumstances of each case and is usually significantly lower than the maximum penalty stipulated by law. Factors relevant to sentencing include prior convictions, the amount of tax evaded, and the offender's conduct after the crime, such as any restitution.
If the proceedings are discontinued, possibly subject to conditions under Section 153a of the German Code of Criminal Procedure (StPO), the individual remains unpunished and no entry is made in the Federal Central Register. The conditions typically include the payment of a sum of money, possibly combined with the requirement to settle any outstanding tax debt.
A possible consequence of tax evasion proceedings is the confiscation of proceeds of crime. In this case, the perpetrator or accomplice is deprived of what they obtained through the offense – for example, unpaid or wrongfully refunded taxes. Furthermore, the state can also order the confiscation of assets from individuals who are not themselves criminally charged but who have gained something through the offense (so-called confiscation victims). The confiscation of assets in criminal proceedings can have economic repercussions that are more severe than the threatened punishment. It is therefore important to be aware of the possibility of confiscation early on and to take appropriate action against it.
Can a self-report result in immunity from prosecution?
Anyone who fully corrects incorrect information, supplements incomplete information, or provides omitted information to the tax authorities regarding all tax offenses of a particular type will not be punished for tax evasion.
A self-disclosure that grants immunity from prosecution is specifically excluded if the tax office has already announced the initiation of criminal or administrative proceedings or ordered a tax audit for the offense. In such cases, the immunity from prosecution is forfeited for the types of taxes and periods covered by the tax audit. However, a self-disclosure may still be possible for unaffected years or types of taxes.
A further requirement for immunity from prosecution is the timely payment of the evaded taxes, including ancillary charges such as interest. Accordingly, a voluntary disclosure requires not only legal review but also careful financial preparation to ensure sufficient liquidity. In practice, the payment deadline set by the tax authorities is usually between one and six months.
The chances of success for a self-report therefore depend on numerous factors. Crucially, the following are particularly important:
- the timely submission,
- the full repayment of all amounts as well as
- the complete disclosure and correction of all incorrect or omitted information.
Even if complete immunity from prosecution is no longer attainable, early cooperation and comprehensive disclosure can usually lead to at least a reduction in punishment.
This is how we support you in cases of alleged tax evasion.
We are a team of lawyers specializing in tax and white-collar crime, available nationwide. We have many years of experience and will advise and defend you competently, with a realistic assessment of your situation.
Our main areas of activity include, among others:
- Defense in tax criminal investigations and, if necessary, in court proceedings and in the main hearing at all levels.
- Representation in proceedings concerning tax offenses
- Defense against the confiscation of assets
- Preventive advice to avoid criminal risks
We offer personal and individual consultations. Please contact us by phone or email to schedule an appointment. We are available at short notice.
Tax evasion occurs in particular when taxes are intentionally reduced or unjustified tax advantages are obtained, for example, by providing incorrect or incomplete information to the tax authorities regarding tax-relevant facts or by unlawfully withholding tax-relevant facts from the tax authorities. Both active conduct and unlawful omissions can be punishable offenses – even the attempt is sufficient. Negligent tax evasion (§ 378 AO) is not a criminal offense, but constitutes an administrative offense.
According to Section 370 Paragraph 1 of the German Fiscal Code (AO), fines or prison sentences of up to five years can be imposed. In particularly serious cases according to Section 370 Paragraph 3 of the German Fiscal Code (AO), the penalty is imprisonment for six months to ten years.
A particularly serious case may exist, among other things, in cases of large scale, abuse of a public official position, continued tax evasion using forged or falsified documents, or in cases of organized crime.
According to the Federal Court of Justice, the criterion of "large scale" is met if the amount of tax evaded exceeds €50,000 (BGHSt 53, 71). This now also applies if the perpetrator's conduct is limited to unlawfully withholding information from the tax authorities regarding tax-relevant facts, and this merely jeopardizes the tax claim (Federal Court of Justice, Judgment of October 27, 2015, 1 StR 373/15).
According to the jurisprudence of the Federal Court of Justice, in cases of particularly high amounts of tax evasion exceeding €50,000, a fine can only be considered proportionate to the offender's culpability if there are significant mitigating circumstances. In cases of tax evasion amounting to millions of euros, a suspended prison sentence is only considered if there are particularly significant mitigating circumstances.
Yes. A variety of circumstances can lead to a reduction in sentence in a specific case, in particular restitution, early and complete disclosure of the facts, and cooperation with the authorities.
You should discuss which measures are appropriate in your case with a criminal defense lawyer.
A self-report can lead to immunity from prosecution if it is complete, timely, and made before actual discovery. The legal requirements are stringent and depend on the individual case.
The statute of limitations is generally five years, but 15 years in particularly serious cases. The decisive factor is the point in time when the offense was completed, such as the notification of the tax assessment. A variety of circumstances can cause the statute of limitations to expire significantly later.
Every criminal proceeding begins with an initial suspicion, which leads to the initiation of an investigation. The investigation concludes with an indictment, a penal order, or the dismissal of the case, for example, due to insufficient suspicion of a crime or upon the imposition of conditions. Following an indictment, a main trial and a court hearing are usually held. The main trial typically ends with a verdict or, in some cases, with a dismissal. Subsequently, an appeal may be pursued.
For example, tax evasion proceedings are discontinued if it turns out that there is no sufficient suspicion of a crime or that the public interest in prosecution is so low that discontinuation subject to conditions is possible.
An experienced lawyer will examine the charges, develop a realistic defense strategy, and vigorously represent your interests before tax authorities, investigative authorities, and courts with the aim of achieving a dismissal of the case or the mildest possible sanction.