Last Updated on May 31, 2021 by LawEuro
The Fiscal Code of Germany
Third Chapter
Criminal proceedings
1st Subchapter
General provisions
Section 385
Validity of procedural rules
(1) Unless otherwise specified in the following provisions, criminal proceedings for tax crimes shall be governed by the general laws on criminal proceedings, namely the Code of Criminal Procedure, the Act on the Constitution of Courts and the Juvenile Courts Act.
(2) With the exception of section 386(2) as well as sections 399 to 401, the provisions of this chapter applicable to tax crimes shall apply accordingly where there is suspicion of a crime aimed at obtaining pecuniary benefits by misrepresenting facts of significance for taxation to the revenue authority or another authority and no law regarding tax crimes is infringed.
Section 386
Jurisdiction of the revenue authority in the case of tax crimes
(1) Where a tax crime is suspected, the revenue authority shall investigate the facts of the case. The revenue authority within the meaning of this chapter shall be the main customs office, the tax office, the Federal Central Tax Office and the child benefits disbursement office.
(2) The revenue authority shall conduct the investigation independently within the limits laid down in sections 399(1), 400 and 401 where the act
1. is exclusively a tax crime or
2. simultaneously violates other criminal laws, and such violation involves church taxes or other public-law levies linked to tax bases , base amounts of non-personal taxes or tax amounts.
(3) Subsection (2) above shall not apply as soon as an arrest warrant or a remand to a psychiatric hospital centre is issued against the accused for the act.
(4) The revenue authority may hand the criminal matter over to the public prosecutor’s office at any time. The public prosecutor’s office may take over the criminal matter at any time. In both cases, the public prosecutor’s office may, with the mutual agreement of the revenue authority, return the criminal matter to the revenue authority.
Section 387
Revenue authority with subject-matter jurisdiction
(1) The revenue authority administering the tax concerned shall have subject-matter jurisdiction.
(2) Jurisdiction pursuant to subsection (1) above may be assigned by way of ordinance to one revenue authority for an area covered by several revenue authorities, insofar as this appears appropriate considering the economic situation or transport infrastructure, the structure of the administrative authorities and other local needs. Such ordinances shall be issued by the government of a Land insofar as the revenue authority is an authority of that Land, and in all other cases by the Federal Ministry of Finance. An ordinance issued by the Federal Ministry of Finance shall not require the consent of the Bundesrat. The Federal Ministry of Finance may delegate the powers under the first sentence above to a higher federal authority by way of an ordinance that shall not require the consent of the Bundesrat. The government of a Land may delegate these powers to the highest authority of the Land responsible for the revenue administration.
Section 388
Revenue authority with local jurisdiction
(1) The revenue authority with local jurisdiction shall be the revenue authority
1. in whose district the tax crime was committed or detected,
2. which is responsible for the fiscal matters at the time of initiating the criminal proceedings, or
3. in whose district the accused has his residence at the time of initiating the criminal proceedings.
(2) Where the residence of the accused changes following the initiation of criminal proceedings, the revenue authority in whose district the new residence is located shall also have local jurisdiction. The same shall apply where the revenue authority’s jurisdiction for fiscal matters changes.
(3) Where the accused does not have his residence within the territory of application of this Code, jurisdiction shall be determined by the habitual abode as well.
Section 389
Related criminal matters
In the case of related criminal matters, which would, pursuant to section 388, individually fall within the jurisdiction of several revenue authorities, each of these revenue authorities shall be competent. Section 3 of the Code of Civil Procedure shall apply accordingly.
Section 390
Multiple jurisdiction
(1) Where, pursuant to sections 387 to 389, several revenue authorities have jurisdiction, the revenue authority which first initiated criminal proceedings regarding the act shall be given precedence.
(2) At the request of this revenue authority, another revenue authority responsible shall take over the criminal matter where this appears expedient for the investigations. In cases of doubt, the authority to which the requested revenue authority is subordinate shall decide.
Section 391
Competent court
(1) Where the local court has subject-matter jurisdiction, the local court in whose district the Land court has its seat shall have local jurisdiction. Irrespective of a wider provision pursuant to section 58(1) of the Act on the Constitution of Courts, this shall apply in preparatory proceedings only with regard to the consent of the court pursuant to section 153(1) and section 153a(1) of the Code of Criminal Procedure.
(2) Notwithstanding the first sentence of subsection (1) above, the government of a Land may issue ordinances specifying jurisdiction insofar as this appears appropriate considering the economic situation or transport infrastructure, the structure of the administrative authorities and other local needs. The government of a Land may transfer this power to the justice authorities of the Land.
(3) Criminal proceedings for tax crimes should be allocated to a particular department at a local court.
(4) Subsections (1) to (3) above shall also apply where the proceedings concern not only tax crimes; they shall not apply, however, where the same action constitutes a crime pursuant to the Narcotics Act or where a tax crime concerns motor vehicle tax.
Section 392
Defence
(1) Notwithstanding section 138(1) of the Code of Criminal Procedure, tax consultants, tax representatives, auditors and certified accountants may also be appointed to the defence insofar as the revenue authority conducts the criminal proceedings independently; in all other cases, they may lead the defence only together with lawyer or teacher of law at a German institution of higher education within the meaning of the Framework Act for Higher Education who is qualified to exercise the functions of a judge.
(2) Section 138(2) of the Code of Criminal Procedure shall remain unaffected.
Section 393
Relationship between criminal proceedings and the taxation procedure
(1) The rights and obligations of the taxpayers and of the revenue authority in the taxation procedure and in criminal proceedings shall be determined by the regulations which apply to the proceedings in the particular case. In the taxation procedure, however, coercive measures (section 328) against the taxpayer shall be impermissible where this would force him to incriminate himself in a tax crime or tax-related administrative offence which he committed. This shall invariably apply where criminal proceedings have been initiated against him for such an act. The taxpayer shall be instructed accordingly as necessary.
(2) Where during criminal proceedings the public prosecutor’s office or the court learns from the tax records of facts or evidence which the taxpayer, in compliance with his obligations under tax law, revealed to the revenue authority before the initiation of criminal proceedings or in ignorance of the initiation of criminal proceedings, this knowledge may not be used against him for the prosecution of an act that is not a tax crime. This shall not apply to crimes for the prosecution of which there is a compelling public interest (section 30(4) number 5).
(3) Findings which the revenue authority or the public prosecutor’s office lawfully gained in the course of criminal investigations may be used in the taxation procedure. This shall also apply with respect to findings subject to the privacy of correspondence, posts and telecommunications to the extent that the revenue authority legally obtained them within in the course of their own criminal investigations or to the extent that information may be issued to the revenue authorities pursuant to the provisions of the Code of Criminal Procedure.
Section 394
Transfer of ownership
Where an unknown person, who was caught in the act of committing a tax crime but escaped, has left items behind and these items are seized or otherwise secured because it is possible to confiscate them, they shall become the property of the State after one year has elapsed if the owner of the items is unknown and the revenue authority has announced the impending loss of the property by means of a public notice. Section 10(2), first sentence, of the Administrative Service of Documents Act shall apply subject to the condition that an announcement of the notice pursuant to the first sentence above has been published. The period shall begin with the displaying of the announcement.
Section 395
Revenue authority’s power to inspect files
The revenue authority shall be authorised to inspect the files which are available to the court or which would have to be presented to the court in the case of charges being brought, as well as inspect confiscated or secured objects. The files shall be sent to the revenue authority upon application for inspection.
Section 396
Suspending proceedings
(1) Where whether the act can be adjudged to constitute tax evasion depends on whether a tax claim exists, whether taxes have been understated or whether unwarranted tax advantages have been derived, the criminal proceedings shall be suspended until the taxation procedure is concluded and can no longer be appealed.
(2) During investigations, the public prosecutor’s office shall rule on the suspension; in the proceedings once public charges have been brought, the court dealing with the matter shall rule on the suspension.
(3) The limitation shall be adjourned while the proceedings are suspended.
2nd Subchapter
Investigation
I. General
Section 397
Initiating criminal proceedings
(1) Criminal proceedings shall be deemed to have been initiated as soon as the revenue authority, the police, the public prosecutor’s office, one of its investigators or the judge in a criminal court adopts a measure, the purpose of which is identifiably to institute criminal action against somebody for a tax crime.
(2) The measure and the time at which it was taken shall be entered in the records without undue delay.
(3) The accused shall be informed of the initiation of criminal proceedings at the latest when he is called upon to reveal facts or supply documents which are related to the crime of which he is suspected.
Section 398
Stay on the grounds of insignificance
The public prosecutor’s office may refrain, even without the consent of the court responsible for opening the main proceedings, from prosecuting tax evasion where only a minor understatement of tax has occurred or where only minor tax advantages have been derived, if the perpetrator’s degree of guilt is slight and there is no public interest in the prosecution. This shall apply accordingly to proceedings brought for the receipt, holding or sale of goods obtained by tax evasion pursuant to section 374 and for aiding and abetting a person who has committed one of the acts under section 375(1) numbers 1 to 3.
Section 398a
Refraining from prosecution in certain cases
(1) In cases where exemption from punishment is denied solely on the basis of section 371(2), first sentence, numbers 3 or 4, prosecution shall not occur if, within the reasonable period of time allowed to him, the person involved in the act
1. pays the taxes which were evaded to his benefit through the perpetration of the act, the interest payable on the evaded taxes in accordance with section 235, and the interest payable under section 233a insofar as such interest is charged on the interest payable on the evaded taxes in accordance with section 235(4), and
2. pays to the Treasury a sum of money in the following amount:
a) 10 percent of the evaded tax where the amount evaded does not exceed 100,000 euros,
b) 15 percent of the evaded tax where the amount evaded exceeds 100,000 euros but does not exceed 1,000,000 euros,
c) 20 percent of the evaded tax where the amount evaded exceeds 1,000,000 euros.
(2) The calculation of the amount evaded shall be based on the principles set forth in section 370(4).
(3) The resumption of a procedure concluded in accordance with subsection (1) above shall be permissible if the revenue authority finds that the information provided as part of a voluntary disclosure was incomplete or incorrect.
(4) The sum of money paid in accordance with subsection (1) number 2 above shall not be reimbursed if the legal consequence of subsection (1) fails to materialise. However, the court may credit this amount to a monetary fine imposed for tax evasion.
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