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31.08.2020 | KPMG Law Insights

Steuerstrafrecht – Automatic exchange of information: Turkey reports account information to Germany

Turkey participates in the automatic exchange of information to combat cross-border tax evasion. Information on accounts in Turkey will be transmitted to German tax authorities as early as December 31, 2020.

I. Background

In 2014, an agreement on the automatic exchange of information on financial accounts between international tax authorities was signed.

The first data exchange took place in 2017 between Germany and 50 countries worldwide.

There are now 100 countries participating in the information exchange. As communicated by the Federal Ministry of Finance (BMF) in a letter dated July 1, 2020, for the first time also Turkey.

The reason for the exchange of information is to effectively combat international tax evasion. The exchange of information works. To date, the German tax authorities have received more than 10 million data records from abroad.

Information such as account holders, account balances and income such as interest, dividends and capital gains are exchanged.

  1. Exchange of information with Turkey

Turkish financial institutions (banks and insurance companies) are obliged to transmit the data to be exchanged to a centrally competent body in Turkey. This office then transmits the data to the German Federal Central Tax Office (BZSt).

In principle, this exchange of information takes place at the September 30 of a subsequent year. For 2019, this would therefore already be the September 30, 2020. However, because of the COVID-19 pandemic, countries participating in the information exchange have agreed to extend to the December 31, 2020 agreed. This also applies to Turkey.

Using software, the BZSt filters the transmitted data records and assigns them to domestic taxpayers according to their tax identification number. The information is then forwarded to the relevant tax offices. There, it is checked whether the income from Turkey was correctly reported and taxed in the German tax return.

The information from Turkey only concerns the year 2019. As a rule, however, this information already allows conclusions to be drawn about corresponding account balances and income from previous years. In case of doubt, the tax office may estimate income in previous years.

III. Who is specifically affected?

All persons (individuals and legal entities) domiciled or habitually resident in Germany who have capital assets or insurance policies with Turkish financial institutions are affected.

Anyone who has fully declared and paid tax on this income from Turkey in Germany has nothing further to fear.

However, anyone who has not yet declared such income in their German tax return should act quickly, as they could be accused of tax evasion. Willful tax evasion is a criminal offense in Germany punishable by a fine or imprisonment of up to five years, and in serious cases from six months to ten years.

IV. What helps you

In the event of tax evasion, action is required. With a timely filed voluntary declaration exempting from prosecution, there is the possibility of finding the way back to tax honesty. If the voluntary disclosure is formally effective, there is no penalty.

However, a voluntary declaration requires – among other things – that the tax offense has not yet been discovered. Anyone who wants to be on the safe side here should file a voluntary disclosure before December 31, 2020. After that, based on the exchange of information that took place on December 31, 2020, there is a threat of “discovery of the crime.” This in turn leads to the ineffectiveness of the voluntary disclosure.

Those who do not manage to file a voluntary disclosure by December 31, 2020 should know that the issue of “discovery of facts” does not necessarily equate to the exchange of information by December 31, 2020. The legal situation here has not been conclusively clarified. Thus, a voluntary disclosure filed after December 31, 2020, may still help, if applicable.

Our experts are available with their many years of experience for professional representation and defense before authorities as well as courts.

Feel free to contact us with any questions you may have on these topics.

Overview:

PDF Client Information – How the Automatic Exchange of Information Works between Germany and the

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Esra Gyarmati

Senior Associate

Friedenstraße 10
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egyarmati@kpmg-law.com

Dr. Heiko Hoffmann

Partner
Munich Site Manager
Head of Criminal Tax Law

Friedenstraße 10
81671 München

tel: +49 89 59976061652
HHoffmann@kpmg-law.com

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Senior Manager

Heinrich-von-Stephan-Straße 23
79100 Freiburg im Breisgau

tel: +49 761 76999910
jmaier@kpmg-law.com

Arndt Rodatz

Partner
Head of Criminal Tax Law

Fuhlentwiete 5
20355 Hamburg

tel: +49 40 360994 5081
arodatz@kpmg-law.com

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