Germany Plans Major Crackdown on Tax Crime with Tougher Laws and AI Tools
Germany's 26-Point Plan to Combat Tax Evasion and Financial Crime
By Maria Martinez and Christian Kraemer
Government Strategy and Expected Impact
BERLIN, July 16 (Reuters) - Germany's government plans to step up its fight against tax evasion and financial crime with a 26-point package that would increase penalties, add investigators and use artificial intelligence to help authorities detect fraud.
The Finance Ministry declined to give a precise estimate of how much extra revenue the measures could raise, although officials expect the amount to run into billions of euros.
Statements from Key Officials
"Honest people must not be taken for fools," German Finance Minister Lars Klingbeil said. "That is why we are increasing investigative pressure...in the fight against tax fraud."
Major Provisions of the Crackdown
Increased Penalties and Legal Changes
The package includes more checks to combat undeclared work, increases the maximum prison sentence for organised tax crime to 15 years from 10 and reclassifies tax evasion as a felony rather than a misdemeanour.
Strengthening Customs and Data Analysis
The government also plans to pool customs powers, add 1,500 jobs to the customs service's current workforce of about 49,000, and create a data analysis centre with Germany's federal states using artificial intelligence to improve coordination.
Justice Minister's Perspective
"Tax crime harms us all. It undermines trust in the fairness of our constitutional state," said Justice Minister Stefanie Hubig. "It must be clear: tax crime must not pay!"
New Reporting and Record-Keeping Requirements
Companies would be required to report value added tax more promptly under a new electronic system, while accounting records would have to be kept for 15 years, up from 10 years, so that prosecutors have time to secure evidence.
Cash-intensive businesses would face mandatory electronic cash-register rules, the ministry said.
Further Measures and Future Outlook
Ending Voluntary Disclosure and Increasing Fines
The plan would also abolish the current form of voluntary disclosure that can allow tax offenders to avoid prosecution by repaying evaded taxes and a surcharge.
Authorities would gain stronger powers to identify and seize assets of suspicious origin, while fines for companies involved in tax evasion would be increased.
Whistleblower Protections and Closing Loopholes
The government also plans to strengthen whistleblower protections, expand the systematic purchase of tax data and examine ways to close loopholes used in aggressive tax planning.
Projected Revenue and Budget Implications
Klingbeil has pencilled in €1 billion in additional revenue from fighting tax fraud in 2027. The draft budget for next year sets spending at €555.4 billion.
(Reporting by Maria Martinez and Christian Kraemer; editing by Matthias Williams and Ros Russell)
