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Germany's NRW Gets Tough On Tax Avoidance

Thursday, 16 May 2013   (0 Comments)
Posted by: Author: Ulrika Lomas
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Source: Ulrika Lomas (, Brussels)

The German State of North Rhine-Westphalia (NRW) has announced plans to set up a working group within the Finance Ministry tasked with developing effective measures to combat tax avoidance, by closing legal loopholes. NRW already uses stolen tax information to tackle tax evasion.

Defending the plans, NRW's Finance Minister Norbert Walter-Borjans highlighted the fact that over EUR160bn (USD207bn) is lost each year in Germany through tax evasion and tax avoidance. More money is lost by international concerns exploiting specific loopholes in the tax system, than by illegal means, the Minister pointed out.

Walter-Borjans underlined the need for decisive action at national, European, and global level to combat tax avoidance and called for better instruments to fight tax evasion.

Since 2010, the German state of North Rhine-Westphalia has used stolen tax data discs as an effective means with which to clamp down on tax evasion.

Last month, NRW's Finance Ministry revealed that the purchase of such discs, containing information on alleged German tax evaders, together with the analysis of voluntary declarations, had served to generate a total of EUR670m in additional revenues for the federal state. Of this figure, approximately EUR400m was derived from 8,000 voluntary declarations relating to undeclared assets held in Swiss banks.

The systematic analysis of data from so-called "tax havens" and low-tax jurisdictions is currently the most effective means of combating tax evasion and recovering much-needed revenue for investment in education, infrastructure and public security, the Minister stressed. Until there is an effective exchange of information mechanism in place at international level, the tax data discs will remain an indispensable instrument for guaranteeing tax collection, he made clear.

Concluding, NRW's Finance Ministry reiterated that any individuals with hitherto undeclared assets held abroad are able to regularize their accounts by submitting a voluntary declaration to the tax authorities. To avoid prosecution, taxpayers must provide full details of such assets and not already be under investigation, the Ministry ended.



Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

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