02.09.2016 | KPMG Law Insights

Commercial Criminal Law – Mere Correction or Already Self-Disclosure?

Mere correction or already self-disclosure?

For the first time, the Federal Ministry of Finance intends to issue an administrative instruction on the distinction between a correction of declarations pursuant to Section 153 of the German Fiscal Code (AO) and an exempting voluntary declaration pursuant to Section 371 of the German Fiscal Code (AO). Functioning internal control systems (tax compliance systems) can invalidate accusations of intent or recklessness.

In recent years, companies have increasingly been confronted with the question of whether a mere notification and correction of declarations pursuant to Section 153 AO is still sufficient. Or do the persons involved have to protect themselves under criminal law or the law on fines by filing a voluntary disclosure if inaccuracies in submitted tax returns come to light?

Background of the administrative instruction

Legislators and politicians have their sights set on taxpayers with untaxed capital gains from assets abroad and criminal gangs when it comes to tightening up the criminal tax law. The fact that such situations do not regularly occur at companies has been given little consideration to date.

Even the innovations brought about by the Act Amending the Fiscal Code (including amendments to the provisions on voluntary disclosure) effective January 1, 2015 are still causing considerable difficulties for companies in practice. For example, if information on the last ten calendar years must now be provided for an exempting voluntary disclosure or if an exempting partial voluntary disclosure is only possible to a limited extent.

Delimitation of the two legal norms

Whereas until April 2011 it could be left open whether a correction was to be qualified as a correction pursuant to Section 153 AO or as a self-disclosure exempting from punishment pursuant to Section 371 AO, since the introduction of Section 398a AO (penalty surcharge) this distinction has become of decisive importance.

If the correction is deemed to be a self-disclosure with regard to intentional evasion of taxes in the amount of more than € 25,000, prosecution will be waived only after payment of a penalty surcharge of 10 to 20 percent of the evaded tax. The penalty surcharge must be paid by each party to the offense and thus, if necessary, several times (e.g. separately by all board members or managing directors). This can have an existence-destroying effect on those involved in the crime in the company.

Both in the case of a report and correction pursuant to Section 153 AO and in the case of a voluntary declaration, the declaration was objectively incorrect at the time it was made. If the taxpayer recognizes the inaccuracy of his declaration only after the fact, according to the discussion draft now published, there is neither tax evasion nor reckless tax evasion, as both intent and recklessness were lacking.

This statement, in its brevity and simplicity, is inaccurate for several cases. In the case of a reckless tax evasion, the taxpayer, who did not have positive knowledge at the time of filing the return, but acted recklessly, for example, always recognizes the incorrectness only after the fact. Nevertheless, he committed a reckless tax evasion (§ 378 AO).

No initial suspicion based solely on amount of tax and number of adjustments

The discussion draft clarifies that not every objective inaccuracy suggests the suspicion of a tax offense or tax misdemeanor. A careful examination by the competent tax authority is required to determine whether there is an initial suspicion of intentional tax evasion or reckless tax evasion.

On the other hand, it is pointed out that an initial suspicion of intentional tax evasion or reckless tax evasion cannot be automatically assumed solely on the basis of the amount of the tax impact of the incorrectness of the submitted declaration and the number of submitted corrections. This has often been handled differently in law enforcement practice.

No intent or recklessness in internal control system

In this context, for the first time, the existence of a functioning internal control system (tax compliance system) opens up the possibility of invalidating the accusation of intentional or reckless conduct. Thus, there would “only” be an obligation to correct according to § 153 AO.

All types of companies, in particular group parent companies as well as taxable entities for VAT purposes, are therefore strongly advised to become aware of this group-wide tax compliance obligation.

Persons obliged to report and correct

The taxpayer or the universal successor of a taxpayer is obliged to notify and correct the tax. In the case of legal entities, this obligation applies to the persons acting in accordance with §§ 34 and 35 AO, i.e. e.g. each individual managing director or board member.

Whether in practice, from the point of view of criminal law and the law on fines, other responsible persons should also submit the report and correction must be decided on a case-by-case basis.

Time of the correction notification

The draft clarifies that the notification under Section 153 AO must be made without delay, i.e. without culpable hesitation. However, the correction itself may not be made until later if some time is required to prepare the documents. In this respect, the BMF recommends that the required period of time be justified to the tax authority.

However, whether the mere reporting of an inaccuracy without simultaneous correction is advisable in practice depends on the specific individual case. A mere notification will regularly not meet all the requirements of a voluntary disclosure, so that in this respect the procedure should be coordinated in advance with an advisor and, if necessary, the correction should be made together with the notification.

If there is not enough time for a detailed investigation of the facts and the bases of assessment, a correction, which also meets the requirements of a voluntary disclosure, can be made by way of an estimate including a safety margin. In this context, the draft points out – in line with existing case law – that in the event of a deliberate breach of the obligation to report immediately, there is tax evasion by omission.

Explore #more

13.06.2024 | Press releases

Handelsblatt and Best Lawyers honor KPMG Law Experts

Best Lawyers has once again identified the best commercial lawyers in Germany for 2024 exclusively for Handelsblatt. A total of 28 lawyers were honored by…

27.05.2024 | KPMG Law Insights

Agreement on ecodesign regulation: products to become more sustainable

After lengthy negotiations, the Council and Parliament of the European Union reached a provisional agreement on the Ecodesign Regulation on the night of December 5,…

22.05.2024 | KPMG Law Insights

The AI Act is coming: EU wants to get a grip on AI risks

For many people, artificial intelligence (AI) is the great hope for business, healthcare and science. But there are also plenty of critics who fear the…

17.05.2024 | KPMG Law Insights

Podcast series “KPMG Law on air”: When the family business is to be sold

Around 38,000 family businesses are currently handed over each year. In most cases, the change of ownership takes place within the family. But more and…

03.05.2024 | KPMG Law Insights

Doubts about inability to work? What employers can do

The certificate of incapacity for work (AU certificate) serves as proof of incapacity for work due to illness. However, only if the certificate meets certain…

27.03.2024 | KPMG Law Insights

EU Buildings Directive: life cycle greenhouse potential becomes relevant

On March 12, 2024, the EU Parliament approved the amendment to the EU Buildings Directive. The directive obliges member states and, indirectly, building owners and…

19.03.2024 | Business Performance & Resilience, KPMG Law Insights

CSDDD: Provisional agreement on the EU Supply Chain Directive

The EU member states agreed on the CSDDD, the EU Supply Chain Directive, on March 15, 2024. Germany abstained from the vote. Negotiators from the…

21.02.2024 | KPMG Law Insights, KPMG Law Insights

The Digital Services Act – what does it mean for companies?

The Digital Services Act (DSA) is a key component of the EU’s digital strategy and came into force on November 16, 2022. As a regulation,…

15.02.2024 | KPMG Law Insights

Data compliance management: How to implement it in practice

Part 3 of the article series “Professional tips for data compliance management”   The third part of this series of articles deals with data compliance

14.02.2024 | Business Performance & Resilience, PR Publications

Guest article in ZURe: Monitoring the implementation of the LkSG

The current issue of ZURe (p. 20 ff.) contains a guest article by KPMG Law Partner Thomas Uhlig (Head of General Business and Commercial Law),…


Dr. Konstantin von Busekist

Managing Partner
Head of Global Compliance Practice
KPMG Law EMA Leader

Tersteegenstraße 19-23
40474 Düsseldorf

tel: +49 211 4155597123

Dr. Heiko Hoffmann

Munich Site Manager
Head of Criminal Tax Law

Friedenstraße 10
81671 München

tel: +49 89 59976061652

Arndt Rodatz

Head of Criminal Tax Law

Fuhlentwiete 5
20355 Hamburg

tel: +49 40 360994 5081

© 2024 KPMG Law Rechtsanwaltsgesellschaft mbH, associated with KPMG AG Wirtschaftsprüfungsgesellschaft, a public limited company under German law and a member of the global KPMG organisation of independent member firms affiliated with KPMG International Limited, a Private English Company Limited by Guarantee. All rights reserved. For more details on the structure of KPMG’s global organisation, please visit

 KPMG International does not provide services to clients. No member firm is authorised to bind or contract KPMG International or any other member firm to any third party, just as KPMG International is not authorised to bind or contract any other member firm.