Action Plan Against Tax Crime: Voluntary Disclosure Allowing for Immunity from Prosecution to Be Abolished

Tax and financial crime will be prosecuted more rigorously in Germany going forward. On July 16, 2026, Federal Minister of Finance Lars Klingbeil and Federal Minister of Justice Dr. Stefanie Hubig presented a 26-point action plan to combat tax and financial crime. The plan focuses on better coordination among investigative agencies, the expansion of data analysis, and a significantly increased risk of detection for tax evasion.

For companies and senior executives, one announcement in particular is especially relevant: Voluntary disclosure to avoid criminal penalties under Section 371 of the German Fiscal Code (AO) is to be abolished in its current form. The federal government justifies this by stating that tax evasion must have tangible consequences and that, in its view, the current regulation creates the wrong incentives. However, it remains unclear how this policy announcement will be specifically implemented in law. According to the announcements made so far, voluntary disclosure will, in certain circumstances (above certain thresholds), only serve to mitigate punishment. At present, as far as can be gathered from the press release and the action plan, no detailed draft legislation has yet been formulated.

Who is affected?

The new action plan is not limited to traditional cases of untaxed income. It is also explicitly aimed at businesses. The federal government intends to deploy the Federal Tax Audit Office in a more targeted manner, conduct risk-based audits of large companies and complex corporate structures, and focus the resources thus freed up more heavily on specific cases of suspected tax evasion.

This is particularly relevant for companies for two reasons: First, the risk of detection is expected to increase due to improved coordination among regulatory agencies, data analysis, and risk-based audits. Tax compliance, tax documentation, and internal investigations will therefore continue to gain in importance. This applies in particular to cross-border matters, sales tax structures, aggressive tax planning, dividend structuring, or historical errors in tax returns. Second, voluntary disclosure—a tool that often plays a central role in corporate practice for mitigating criminal tax risks—is under political pressure.

What changes does the Action Plan on Tax Crime call for?

Abolition of immunity from prosecution for voluntary disclosure in its current form

The most politically significant issue concerns voluntary disclosure in cases of tax evasion. Under current law, a valid voluntary disclosure may lead to immunity from prosecution under strict conditions. In particular, this requires that the taxpayer fully correct any incorrect information, supplement any incomplete information, or provide any omitted information to the tax authorities regarding all tax offenses of a particular tax type. The information must, in principle, cover all tax offenses of a given tax category for which the statute of limitations has not expired, but must at least cover the last ten calendar years.

German tax law is very complex and prone to errors. If a taxpayer discovers an error, they are required to report it and correct it. The same applies to situations where the tax implications are uncertain. In practice, these reports to the tax authorities are often filed as voluntary disclosures as a precautionary measure, since it cannot be ruled out that the tax authorities might initiate criminal tax proceedings in such cases. The elimination of the immunity from criminal liability afforded by voluntary disclosure further exacerbates this tension. This would mean that, in the future, companies would no longer be able to report simple tax errors or cases of doubt without exposing those responsible to significant risks of criminal prosecution.

The federal government now intends to abolish the immunity from prosecution granted by voluntary disclosure in its current form. The action plan states that, in the future, taxpayers should no longer be able to “buy their way out of trouble so easily.”

However, this is still only a political announcement. Until the law is amended, the current legal situation remains in effect. It is also unclear whether voluntary disclosure will be completely abolished in the future or whether its effect will be limited to mitigating punishment only in certain categories of cases, such as those involving large amounts of tax evasion or particularly serious cases. It is also unclear whether comparable changes will then apply to voluntary disclosure regarding reckless tax evasion.

Stricter Regulations on Tax Evasion by Companies

The action plan also includes a significant component focused on businesses. Companies that deliberately flout the law are to be sanctioned more consistently and held accountable. The federal government explicitly presents this as a means of protecting law-abiding companies from unscrupulous competitors.

In addition, a criminal offense for particularly serious tax evasion is to be introduced, with a minimum sentence of one year in prison and a maximum of 15 years.

A prison sentence of 15 years represents the maximum term for a fixed-term prison sentence. The only harsher penalty would be life imprisonment. For economic crimes, a maximum sentence of 15 years would be unprecedented. To date, there are no economic offenses that provide for a sentencing range extending to the statutory maximum of 15 years. As a reminder: In 2008, the legislature abolished the criminal offense of large-scale tax evasion committed on a commercial or gang-related basis (Section 370a of the German Fiscal Code) precisely because of constitutional concerns.

In addition, companies that have been sanctioned for “serious tax offenses” are to be listed in a public registry.

Increase the risk of detection and strengthen enforcement

In addition to stricter penalties, the action plan focuses primarily on strengthening the government’s investigative and analytical capabilities. A new Joint Center for Combating Tax and Financial Crime is to be established within the customs service, where state tax investigators and customs financial investigators will coordinate key cases and exchange information.

In addition, a data analysis center is to be established. Tax data will be consolidated on a central data platform and analyzed using AI-powered tools to identify patterns and connections more quickly. In addition, the action plan calls for expanding systematic data collection and strengthening whistleblower mechanisms so that tax evasion and tax crimes can be detected earlier. The retention periods for accounting records are to be extended to 15 years. As part of efforts to reduce bureaucracy, these periods were only recently shortened from ten to eight years in 2025.

Why Voluntary Disclosure Should Not Be Abolished Prematurely

Voluntary disclosure leading to immunity from prosecution is politically controversial. It is often criticized as a privilege for tax evaders. However, this view is too narrow. The current regulation is already strictly limited. Voluntary disclosure is not an unconditional “get-out-of-jail-free card.” It generally requires full disclosure of all relevant tax offenses within a given tax category and is, for example, excluded if criminal or administrative penalty proceedings have already been initiated, if officials have appeared for an audit or investigation, or if the offense had already been discovered and the offender knew this or should have anticipated it.

Even in cases involving larger amounts, there is no longer automatic immunity from prosecution. If the underpaid tax or the tax benefit obtained exceeds 25,000 euros per offense, immunity from prosecution does not apply. In certain cases, prosecution may be waived only under additional conditions—in particular, upon payment of an additional sum of money.

There are therefore good reasons not to rush into abolishing the voluntary disclosure system:

• The purpose of voluntary disclosure is, on the one hand, to tap into previously hidden sources of tax revenue. On the other hand, it is intended to provide tax evaders with an incentive to return to tax compliance. Such a “bridge to legality” resolves the tension that often arises when a taxpayer is unable to file a correct tax return for the first time without simultaneously disclosing facts that reveal prior tax evasion. This function would be jeopardized if voluntary disclosure were completely abolished or made more stringent.
• The requirements for an effective voluntary disclosure are already high today. Under Section 371 of the German Fiscal Code (AO), immunity from prosecution is granted only if the information is fully corrected, supplemented, or submitted retroactively. In addition, numerous grounds for exclusion apply. Even today, there is no automatic exemption from punishment for larger amounts. If the underpaid tax or the tax benefit obtained exceeds 25,000 euros per offense, exemption from punishment does not apply under Section 371(2) of the German Fiscal Code (AO). In certain cases, under Section 398a of the German Fiscal Code (AO), prosecution may be waived only under additional conditions, in particular upon payment of an additional sum equal to 10 percent, 15 percent, or 20 percent of the evaded tax by each and every individual involved.
• Voluntary disclosure provides a legally established path back to tax compliance. In companies in particular, tax irregularities may not be identified until after the fact—for example, during internal investigations, tax compliance reviews, or when changing tax advisors. An effective voluntary disclosure mechanism can provide an incentive to fully disclose such matters and rectify them for tax purposes.
• A higher risk of detection does not necessarily argue against, but rather in favor of, an effective voluntary disclosure program. As the government expands data analysis, AI-supported audits, whistleblower mechanisms, and interagency investigations, the pressure on taxpayers to resolve past tax issues increases. It is precisely in such cases that a clearly regulated voluntary disclosure program can help ensure full disclosure and prompt payment of back taxes. It remains to be seen, in any case, how effective the announced investigative tools will actually be in the future. The abolition of voluntary disclosure could therefore also result in back taxes not being collected at all.

How companies should act now

The action plan is not yet law. However, it clearly sets the political direction: tax and financial crimes are to be punished more severely, detected more quickly, and prosecuted more consistently.

Companies should take this as an opportunity to review their tax compliance structures. This includes, in particular, clear processes for identifying tax risks, defined escalation procedures for suspected cases, proper documentation of tax decisions, and a structured approach to potential historical cases. As long as the current legal situation remains in effect, voluntary disclosure remains a possible tool for resolving criminal tax risks. Whether and to what extent this will still apply in the future remains unclear under the current action plan.

Co-author: Dr. Volodymyr Izrailevych