Anyone who fails to properly declare taxable income in their tax return and thereby faces an accusation of tax evasion (Steuerhinterziehung) in Germany has the option under Section 371 of the German Fiscal Code (Abgabenordnung, AO) of seeking exemption from prosecution through a voluntary self-disclosure (strafbefreiende Selbstanzeige). Voluntary self-disclosure opens a path to immunity from prosecution — but that path is subject to strict requirements: the information provided must be complete and accurate, and the self-disclosure must be submitted before any of the statutory blocking grounds (Sperrgründe) set out in Section 371(2) AO come into effect.
This issue is not limited to German nationals. Expats living in Germany, foreign nationals with German-sourced income — such as rental income from German property, dividends from German investments, or assets received through inheritance — and former residents who retained German accounts or holdings after leaving the country may all have German tax obligations they were unaware of or did not fully meet. For these individuals, voluntary self-disclosure under German law may be a relevant and time-sensitive option.
At Schlun & Elseven, our German criminal tax lawyers advise and support clients comprehensively in the preparation and submission of a voluntary self-disclosure. We assess the specific facts of the case, advise on the available legal options and the requirements that must be satisfied, carefully prepare the self-disclosure, and submit it to the competent tax office within the required timeframe. Our lawyers handle all subsequent correspondence with the German tax authorities — with the aim of protecting the rights and interests of our clients at every stage of the process.
Voluntary Self-Disclosure for Tax Evasion (Section 371 AO)
The legal basis for voluntary self-disclosure in Germany is Section 371 AO. The following requirements must be met in order to obtain exemption from prosecution:
- The offense must not be the subject of tax authority investigations: exemption from prosecution does not apply if, at the time of the disclosure, one of the statutory blocking grounds under Section 371(2) AO is already in place — for example, notification of an audit order, the appearance of an auditor for an external audit, notification of the initiation of criminal or administrative fine proceedings, or discovery of the offense by the tax authorities.
- The disclosure must be complete in every respect — the taxpayer must correct all incorrect information and supplement or add all information that was previously concealed or incomplete.
- The taxpayer must pay the evaded taxes within the specified deadline. Note that under Section 371(2)(1)(3) AO, exemption from prosecution does not apply where the advantage obtained through tax evasion exceeds €25,000. However, even in such cases prosecution may be waived if, in addition to the regular back payment, a surcharge is paid. Under Section 398a(2) AO, this surcharge amounts to 10% for amounts up to €100,000, 15% for amounts between €100,000 and €1,000,000, and 20% for amounts exceeding €1,000,000.
The blocking ground relating to official discovery of the offense deserves particular attention. If a self-disclosure is submitted only after tax authority investigations have become known, it no longer has any immunity-conferring effect. On the contrary, the information contained in the disclosure may in certain circumstances be used as evidence in criminal proceedings for tax evasion under German law. In such a case, the self-disclosure affords no protection from criminal sanctions.
At Schlun & Elseven, our German criminal tax lawyers advise and represent clients in all matters of criminal tax law — from assessing the requirements for validity through to drafting and submitting the self-disclosure.
Submitting the Self-Disclosure to the Tax Office
Anyone considering a voluntary self-disclosure in Germany should seek legal advice at an early stage. At Schlun & Elseven, our criminal tax lawyers have extensive experience in this area and ensure that the disclosure is submitted in full and on time to the competent tax authority. Swift action is essential: every delay carries the risk that the German tax authorities discover the irregularities independently, triggering a statutory blocking ground that would preclude immunity from prosecution. Where the authorities have already announced an external audit, an auditor appears, or search measures are initiated, an effective self-disclosure is generally no longer possible. In such cases, immediate contact with our lawyers is advised.
A self-disclosure may be submitted in writing or orally to the German tax authorities. There is no statutory requirement for written form; nonetheless, we recommend that clients always submit in writing. As noted above, the self-disclosure must be complete — any omission may jeopardize its validity. Written form has the advantage that the content can be carefully reviewed and documented before submission, and that proof of submission can be established. Our lawyers prepare the self-disclosure together with the client and ensure that it meets all statutory requirements under German law.
There is no obligation to state reasons for the tax shortfall in the self-disclosure. Volunteering such explanations is inadvisable in practice, as doing so may increase the risk of further legal complications.
In Practice: Challenges and Common Pitfalls
Voluntary self-disclosure may appear straightforward in structure, but in practice it presents considerable difficulties. One of the most common pitfalls is incompleteness: anyone who discloses only part of the undeclared income — for example by overlooking or deliberately omitting individual foreign assets or capital income — risks rendering the entire self-disclosure wholly ineffective under German law.
For international clients in particular, the risk of discovery by the German tax authorities is more significant than many assume. Germany participates in the Common Reporting Standard (CRS), an OECD framework under which financial institutions in more than 100 countries automatically report account data — including balances, interest, and dividends — to their local tax authorities, who in turn share that data with Germany. This means that undisclosed foreign accounts or assets held in participating countries are systematically visible to the German tax authorities, often without any targeted investigation. For expats, former residents, and foreign nationals with German tax obligations, this substantially increases the likelihood that undeclared income will come to light — and underlines why acting before that happens is so important.
The question of limitation periods is also regularly underestimated. Under German criminal tax law, the prosecution period is five years for simple tax evasion (Section 369(2) AO in conjunction with Section 78(3)(4) of the Criminal Code, Strafgesetzbuch) and up to fifteen years in serious cases (Section 376(1) AO). The self-disclosure must cover all still-prosecutable periods without gaps. Added to this is the time pressure: those who hesitate or wait to see whether the German authorities will act may lose the critical window of opportunity. In an era of automated data analysis, that moment can arrive faster than anticipated. Legal support therefore serves not only to ensure formal compliance, but also to provide a realistic assessment of whether and under what conditions an immunity-conferring self-disclosure remains possible in a given case.
What Schlun & Elseven Can Do for You
An immunity-conferring self-disclosure stands or falls on its technical precision and timing. At Schlun & Elseven, our German criminal tax lawyers begin by analyzing the specific circumstances of each case: is a blocking ground already in place? Which assessment periods are affected? What risks exist — including any professional or procedural consequences under German law? On this basis, we develop a legally sound strategy, calculate the amounts to be repaid, and prepare the self-disclosure with the requisite care. Clients receive support not only at the point of submission, but also in the event that criminal tax proceedings follow — in which case our lawyers take over the defense before the German investigating authorities and the courts.
An Overview: Frequently Asked Questions about Contesting Examinations
Voluntary self-disclosure under Section 371 AO enables persons who have evaded taxes in Germany to obtain exemption from prosecution through full disclosure and repayment of the evaded amounts. It is subject to strict statutory requirements, the non-fulfillment of which can negate the immunity from prosecution entirely.
An immunity-conferring self-disclosure requires that, at the time of submission, none of the statutory blocking grounds under Section 371(2) AO are in place — in particular, no criminal or administrative fine proceedings may have been initiated and no audit order may have been notified to the taxpayer. All incorrect or incomplete information must be corrected, and all previously undisclosed taxable matters fully disclosed. Finally, the evaded tax amounts, including interest and any applicable statutory surcharges, must be repaid within the specified deadline. A German criminal tax lawyer will assess whether these requirements can still be satisfied in the specific case and will support the preparation and submission of the self-disclosure.
A defective or incomplete self-disclosure has no immunity-conferring effect. Criminal prosecution for tax evasion under Section 370 AO, therefore, remains open. Those affected face a fine or a custodial sentence of up to five years — in serious cases, up to ten years. Professional consequences may also arise. Legal assistance in preparing the self-disclosure is therefore indispensable.
Although German law permits oral self-disclosure, written form is recommended as it allows for careful review and complete documentation. At Schlun & Elseven, our criminal tax lawyers draft the self-disclosure together with the client and ensure that it fully satisfies all statutory requirements.
Once criminal or administrative fine proceedings have been initiated against the taxpayer, an immunity-conferring self-disclosure is generally ruled out under German law. The same applies where an audit order has been notified, where an officer of the competent authority has already appeared for a tax audit, or where the investigating authorities have announced or are conducting office or property searches. In this situation, immediate legal advice is essential to preserve the remaining options.
At Schlun & Elseven, our German criminal tax lawyers support clients from the initial legal assessment through the calculation of back payments and the preparation of the self-disclosure to full correspondence with the German tax office. Should criminal tax proceedings follow nonetheless, our lawyers will take over representation before the investigating authorities and the courts.
Practice Group: German Criminal Tax Law
Practice Group:
German Criminal Tax Law Cases
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