VAT Evasion in Germany – Risks, Typical Scenarios and Defence
The Value Added Tax (VAT)</strong) in Germany is a self-assessed tax. Businesses are responsible for calculating, declaring and paying it themselves – a system prone to mistakes and abuse. Anyone who fails to declare turnover, uses incorrect tax rates, issues false invoices or unlawfully claims input tax deductions risks being accused of tax evasion.
If you are under investigation in Germany for white-collar or corporate crime – for example in connection with the conduct described on this page – you should involve our English-speaking criminal defence solicitors in Frankfurt at an early stage, with particular experience in white-collar and corporate crime defence and, where relevant, also in tax evasion and criminal tax law.
For a confidential initial assessment of your situation and the development of a tailored defence strategy, you can reach us on +49 69 710 33 330 or by email at kanzlei@dr-buchert.de.
Typical Types of Offences
- • Non-declaration or incomplete declaration of taxable turnover
- • Incorrect or unauthorised tax statement (§ 14c German VAT Act)
- • Unjustified input tax deduction (e.g. false invoices or wrong supplier/client)
- • Participation in a VAT carousel or chain transactions
VAT Pre-Return vs. Annual Return
Incorrect VAT pre-returns often lead only to a temporary reduction of tax, whereas the annual return may result in a final reduction – both can be criminally relevant. Early corrections and strategic defence help reduce risks. Our firm provides targeted and confidential advice on all related issues.
Input Tax Deduction: Formal and Substantive Requirements
Frequent sources of error lie in the invoice details: address, service description, and supplier identity. If the input tax deduction is denied due to misuse, substantial repayments may follow. Always review suspicious supply chains – especially where prices appear “too low”.
Since 1 January 2020, under Section 25f of the VAT Act, the tax exemption or input tax deduction can be denied if the entrepreneur knew or should have known that their transaction was part of a tax fraud scheme. We assess whether risk indicators exist and help strengthen your compliance documentation.
Intra-Community and Export Deliveries
- • Intra-Community supplies remain tax-free only with complete documentation and summary reports. Hidden intermediaries or false identities can lead to denial of exemption.
- • Export deliveries to non-EU countries require a material review; formal errors are not always decisive. We evaluate your evidence and help implement reliable audit-proof procedures.
When Under Investigation – How to React
- • Do not act alone – contact specialised defence lawyers immediately.
- • Do not make statements to tax investigators or prosecutors without prior consultation.
- • Preserve documents and comply with retention obligations.
- • Consider a voluntary self-disclosure – correct, complete and timely.
We evaluate limitation periods, assess sentencing risks and develop strategies to minimise damage.
Particularly Risk-Prone Areas
- • False invoices or commission models (e.g. in sales networks)
- • Corporate liability and organisational negligence (§ 71 Fiscal Code)
- • Compensation and set-off limitations in tax crime defence
FAQ: VAT Evasion in Germany
What counts as VAT evasion?
Typical cases include undeclared turnover, wrong tax rates, false exemptions, unjustified input tax deductions or unauthorised tax statements (§ 14c VAT Act).
Is a “temporary reduction” of VAT still punishable?
Usually yes. Even temporary reductions via incorrect pre-returns can constitute tax evasion if intent is proven, depending on the case circumstances.
Can the tax authority allow input tax despite formal errors?
Yes, if the substantive conditions are met. However, in cases of fraud or VAT carousels, the deduction may be denied.
What does Section 25f VAT Act regulate?
It codifies the denial of exemption or input deduction if the entrepreneur knew or should have known of participation in VAT fraud.
What applies to intra-Community supplies?
They remain exempt only if documentation and summary reports are correct. Concealed buyers or collusive behaviour can void exemption.
And for exports outside the EU?
Material conditions prevail; formal mistakes are not always decisive. A foreign VAT offence does not automatically affect German exemption.
Is it punishable if VAT is declared but not paid?
This may constitute an administrative offence under Section 26a VAT Act or, if committed on a commercial scale, Section 26c VAT Act.
When does a voluntary self-disclosure help?
If filed in time, complete and correct, it can lead to exemption from punishment. Seek immediate advice before submission.
Contact our Tax and Criminal Defence Lawyers in Frankfurt
Contact us – your English-speaking tax and criminal defence lawyers in Frankfurt and throughout Germany:
- • Frank M. Peter, Lawyer, Specialist in Criminal Law
- • Dr. Caroline Jacob, Lawyer, Specialist in Criminal Law
- • Of Counsel: Prof. Dr. Frank Peter Schuster
- • Cooperation Partner: Tax Consultant and Former Tax Investigator Frank Wehrheim
Buchert Jacob Peter has been based in Frankfurt am Main for over 25 years, defending clients nationwide in tax and white-collar crime cases with discretion and experience.
Phone: +49 69 710 33 330
Email: kanzlei@dr-buchert.de
More on this topic:
Tax Criminal Law |
Criminal Defence |
White-Collar Crime |
Lawyers
Do you need legal advice?
We advise and represent private individuals and companies in investigative and criminal proceedings nationwide and before all courts. Benefit from our many years of experience and our expertise in criminal defense.