“The jurisprudence tends more and more to exclude a voluntary disclosure due to a so-called discovery of the crime,” says the partner of the law firm Flick Gocke Schaumburg.
(Photo: Flick Gocke Schaumburg)
Cologne A research network has extracted documents on the financial transactions of hundreds of politicians from a data leak. It should be about dubious business in tax havens.
Karsten Randt is a partner at Flick Gocke Schaumburg. He has worked in the field of criminal tax law for more than two decades.
In the past few years Randt has repeatedly represented clients who have been targeted by tax investigators or public prosecutors. Some of them were exposed through tax CDs, others through data leaks such as the “Pandora Papers”.
In view of the latest publications, Randt expects an increased number of voluntary reports. However, it has become much more difficult today to report to the authorities in good time. However, waiting is not an alternative.
Read the entire interview here:
Mr. Randt, there have been a few leaks in recent years that have revealed questionable tax arrangements. How do you classify the revelations in the Pandora Papers?
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An exact assessment is not yet possible. But based on the information published by the journalists’ network ICIJ, it is a large data set of twelve million documents from 14 different sources from a number of typical offshore destinations. In this respect, it can be assumed that this will be another significant revelation.
For years, politicians have asserted that they want to drain tax havens. What progress do you see?
The problem has been recognized as such since the late 1990s, but major international agreements have not been reached. The combination of banking secrecy and practically no legal assistance was a guarantee that the anonymity of illegal funds was secured. In the last few years in particular, however, great progress has been made, in particular through a more rigorous fight against money laundering.
Why did that bring progress?
The instruments used to combat money laundering and tax evasion are more closely intertwined. Anyone who intends to evade taxes not only needs the discretion of a mailbox company, they also need an international bank that accepts the assets for management. If this bank consistently applies anti-money laundering guidelines, the identity of the customer must be known to it. Suspicious transactions must be reported to the investigating authority. If this legal requirement can be fully implemented internationally, the offshore platforms will be drained. Figuratively speaking, the noose closes slowly.
The public excitement is great after the publications of the “Panama Papers” or now the “Pandora Papers”. How did you experience the revelations in your practice as a criminal tax lawyer?
Disclosure of discreet tax sources leads to an increased demand for voluntary disclosures in order to avoid prosecution in this way. However, due to the large waves of disclosure – starting in 2009 – the case potential has decreased significantly over the years.
Are there many cases in which taxes have been evaded, or is it more a question of legal tax arrangements and thus a moral discussion?
The case constellations cannot be assessed in general because there are different motivations for managing assets discretely. For example, the political situation, especially in dictatorships, is a motive for this. In the 1960s, for example, assets were brought to Switzerland for fear of socialism or expropriation. On the other hand, it has been proven in many cases that tax evasion, corruption and money laundering acts were the actual cause of the cover-up.
Quite practically: Can someone submit a voluntary disclosure after the publication if they evaded taxes with an offshore construction?
Let’s put it this way: the clock is ticking. The jurisprudence tends more and more to exclude a voluntary disclosure due to a so-called discovery of a crime, especially recent decisions indicate this. Nevertheless, disclosure makes sense because it can make house searches or even more serious coercive measures unnecessary and in any case has a considerable mitigating effect.
In particular, how do you assess the recently passed tax haven defense law?
The Tax Haven Defense Act is a further step to make relocating a seat in tax havens less attractive. The main aim here is to make it more difficult for actual companies to structure taxes. Not so much about fighting the lack of transparency through mailbox companies, which is the focus of the “Pandora Papers”.
Mr. Randt, thank you very much for the interview.
More: Why there is still a lot to do in the fight against tax evasion