Can someone be punished for sales tax evasion even if the sales were subsequently deemed tax-exempt?
Yes, says the Federal Court of Justice (BGH) in a decision dated August 5, 2026, which has now been published (Case No. 1 StR 197/26). Specifically, the case concerned the late filing of summary reports (ZM) for intra-Community supplies.
Since January 1, 2020, the proper filing of the summary report has been a substantive legal requirement for the tax exemption of intra-Community supplies. If a business owner fails to file the required advance VAT returns or annual VAT returns and, at the same time, does not submit a properly filed Summary Report, the Federal Court of Justice (BGH) holds that, with the requisite intent, the business owner commits tax evasion by omission as soon as the relevant deadlines have expired. Submitting the Summary Report at a later date may retroactively establish the tax exemption. However, it does not remedy tax evasion that has already been committed.
Structure and Deadlines for the Summary Report
Intra-Community supplies are tax-exempt under Section 4(1)(b) of the German Value-Added Tax Act (UStG) only if, in addition to the requirements of Section 6a UStG, the requirements for the Summary Report are also met. The business must submit the Summary Report to the Federal Central Tax Office (BZSt) in a timely, complete, and accurate manner in accordance with Section 18a of the German Value-Added Tax Act (UStG). The submission deadline generally ends on the 25th day following the end of the reporting period.
The tax authorities permit a subsequent correction or the initial filing of the ZM within the assessment period (Section 4.1.2, Paragraph 3 of the UStAE). However, according to the Federal Court of Justice (BGH), the resulting tax exemption is retroactive for tax purposes only to the date of the transaction.
The Federal Court of Justice’s Ruling: Tax Evasion by Omission
As a member of the executive board of a public limited company (AG), the defendant had failed to file either advance sales tax returns or annual sales tax returns. He also failed to submit the required tax certificates. Only after charges were filed—a few days before the start of the trial—did he submit the tax certificates in order to obtain retroactive exemption from the value-added tax obligation and thus, in his view, immunity from punishment. The Mannheim Regional Court convicted him of tax evasion by omission in five instances. The Federal Court of Justice (BGH) upheld the conviction.
For the annual sales tax returns, the respective deadline for submitting the ZM had already passed by the time the filing deadline expired. In the absence of a properly filed ZM, the intra-Community supplies were not tax-exempt. With the expiration of the filing deadline, this constituted a completed and finalized case of tax evasion by omission.
In the case of advance sales tax returns, however, the ZM deadline was still in effect when the respective filing deadline expired. His obligation to file the advance return, however, continued to exist. In the opinion of the Federal Court of Justice (BGH), the tax evasion was completed and concluded, at the latest, when the deadline for filing the ZM without a proper return also expired.
No Criminal Remedy Through Retroactive Tax Effects
Although, in the view of the tax authorities, intra-Community supplies are retroactively considered tax-exempt if the business owner submits a correct tax return (retrospectively) within the assessment period. However, in the opinion of the Federal Court of Justice (BGH), the retroactive tax effect and the elimination of the tax liability do not alter the fact that the business owner has, in any case, underreported taxes “for a certain period.”
In the opinion of the Federal Court of Justice (BGH), tax evasion that has already occurred may remain or become exempt from criminal liability in cases involving retroactive application only under three circumstances: The legislature has expressly stipulated that retroactive application of tax law also eliminates criminal liability; such a criminal law effect is necessitated by the legislature’s value judgment; or the requirements for a valid voluntary disclosure exempting the taxpayer from criminal liability under § 371 of the German Fiscal Code (AO) are met. The retroactive granting of tax exemption does not, in and of itself, generally constitute such an exceptional case.
These considerations could also apply to other cases involving retroactive effect mandated by law or by a government agency.
What the Federal Court of Justice Did Not Rule On
The Federal Court of Justice ruled exclusively on cases in which advance VAT returns and annual VAT returns were not filed. The following scenario remains unresolved: The business owner reports tax-exempt intra-Community supplies on the advance return but fails to submit a correct intra-Community supply report within the prescribed deadline.
As long as the deadline for the ZM is still in effect, we believe the company may treat the intra-Community supply as tax-exempt in the advance return. If the ZM deadline subsequently expires without a proper filing, the tax exemption is retroactively revoked. However, in our view, this does not retroactively render the originally correct advance return incorrect. For the purposes of criminal liability, the circumstances at the time of its filing are decisive.
However, this does not rule out a risk under criminal tax law: If the taxpayer realizes after the ZM deadline has expired that the tax exemption no longer applies, there may be an obligation to report this immediately under § 153(2) of the German Fiscal Code (AO). If the taxpayer intentionally fails to make the required report, this may constitute tax evasion by omission.
The criminal law risks should be assessed separately in each individual case.
In the case of an annual sales tax return, however, the Federal Court of Justice’s (BGH) rulings are unambiguous. If the relevant ZM deadlines have already expired by the time the annual return is filed and the ZM is missing, the supplies are not tax-exempt. If the business owner nevertheless reports the sales as tax-exempt, this may, if done with the appropriate intent, constitute tax evasion through the provision of false information. Subsequently filing the ZM does not eliminate criminal liability.
Consideration in Sentencing
However, the subsequent filing of the tax return is not without significance under criminal law. The retroactive elimination or reduction of the tax liability must be taken into account when determining the penalty. If the offender subsequently fulfills the requirements for tax exemption on their own, this also constitutes positive post-offense conduct that must be considered when determining the penalty.
Conclusion and Practical Guidance
The timely filing of the summary report is not merely a formality, but a prerequisite for the tax exemption on intra-Community supplies. VAT returns and summary reports must each be filed on time, and their contents must be consistent with one another.
The subsequent filing or correction of the ZM may retroactively restore tax-exempt status. According to the Federal Court of Justice (BGH), it does not remedy tax evasion that has already taken place.
In such cases, it must always be determined whether, in the context of the retroactive filing of the ZM, the conditions for a voluntary disclosure should also be met.
Co-author: Dr. Volodymyr Izrailevych, Senior Manager, Attorney at Law, Certified Tax Lawyer
Tax Contact:
Franz Kirch, Partner, KPMG AG Wirtschaftsprüfungsgesellschaft
Dr. Oliver Buttenhauser, Partner, KPMG AG Wirtschaftsprüfungsgesellschaft
