Large-scale tax evasion will lead to jail time, German court rules | Business| Economy and finance news from a German perspective | DW | 07.02.2012
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Large-scale tax evasion will lead to jail time, German court rules

Germany's Federal Court of Justice has ruled that people found guilty of severe tax fraud must face prison terms.

Germany's Federal Court of Justice (BGH) ruled Tuesday that defendants found guilty of evading at least 1 million euros ($1.31 million) in taxes would in future almost invariably face prison terms.

The court acted on a revision appeal by prosecutors after a regional court in Augsburg handed down a suspended sentence to a 60-year-old German who'd misreported 1.1 million euros.

The man in question was a partner in two companies which were sold to a joint stock company in 2001.

Fraud intended

The defendant received some 15 million euros from the sale, plus company shares. He also remained managing director in one of the firms and in this capacity received 570,000 euros in royalties in 2006.

The businessman partly misreported his earnings and wrongly declared part of the royalties as an endowment. As a result, he became subject to a lower taxation category, meaning he had to pay 1.1 million euros less in taxes.

"Tax evasion is no longer a trivial offense," said Federal Public Prosecutor Wolfgang Kalf, commenting on the ruling in Karlsruhe.

The businessman's case will now have to be reopened at the regional court in Augsburg.

Author: Hardy Graupner (dapd, dpa)
Editor: Martin Kuebler