Planned Reform of Voluntary Disclosure in Tax Criminal Law

Restriction of voluntary disclosure – implications for businesses

The German government is planning to significantly curtail the immunity-granting effect of voluntary disclosure. Corresponding considerations put forward by Federal Minister of Finance Lars Klingbeil became public in April 2026. While full disclosure and repayment of the evaded taxes and interest could previously, in principle, lead to immunity from prosecution, in future higher amounts of tax evasion would only result in mitigation of punishment. This initiative forms part of an action plan against tax crime. The action plan was jointly developed by the Federal Ministry of Finance, the Federal Ministry of the Interior and the Federal Ministry of Justice and was approved by the Cabinet on 25 February 2026. If implemented, it would remove a core element of the current tax criminal law framework.

For businesses, voluntary disclosure has so far played a central role in tax risk management. In the context of internal tax reviews, errors could be identified, corrected on a consolidated basis and disclosed transparently. The aim was to remedy tax issues while at the same time avoiding criminal consequences.

The planned reform fundamentally changes this position. In future, tax corrections can no longer be regarded as a reliable “way out” of criminal exposure, even where there is full disclosure and all formal requirements have been met. Rather, any disclosure may itself trigger a criminal investigation. Businesses must therefore analyse and assess tax matters much more closely from a criminal law perspective.

This is particularly relevant for complex corporate structures in which tax risks regularly arise over longer periods of time. The previous option of remedying such risks collectively would be considerably restricted. Contrary to public perception, voluntary disclosure in the corporate context does not amount to “buying one’s way out” but rather serves as an instrument for the transparent correction of errors within a dense and highly complex tax framework. Such errors often result from complex, impractical rules or system failures – not from any intention to understate tax liabilities.

Particularly in the area of VAT, on both the input and output side, system-related errors can accumulate over time into substantial correction amounts – in some cases reaching the high six- or seven-figure range – without any intention to understate taxes. In our view, businesses that have established a structured and responsible approach within a Tax Compliance Management System should continue to be able to report such errors while retaining immunity from prosecution.

Irrespective of this, the reform would lead to a marked shift towards preventive tax and compliance strategies, at least with a view to positively influencing sentencing.

Voluntary disclosure and tax returns – new risks

In practice, voluntary disclosures have so far often been made by way of corrected tax returns, where such returns were intended for that purpose – for example, through the submission of corrected VAT advance returns. This approach was well established and legally recognised. Such corrections will, in principle, remain possible in future. However, they will lose their previous function as an “exit instrument”. Even where there is full disclosure, criminal investigations may still be initiated.

This gives rise to several practical consequences:

• Any tax correction process may trigger an investigation
• The previous distinction between a simple correction and voluntary disclosure is becoming increasingly blurred
• Criminal law expertise must be integrated into decision-making processes much earlier

In addition, tax reporting obligations have, in part, been expanded (see article on indicators). Such standardised reconciliations significantly increase transparency for the tax authorities and thereby also raise the risk of criminal proceedings being initiated in an “automated” manner. If it is no longer the individual case officer who assesses whether there are grounds for further inquiry or an actual initial suspicion of a criminal offence, but rather this assumption follows from a standardised query, this is likely to lead to a significant increase in the number of criminal proceedings initiated. In addition, the above-mentioned action plan provides for the future use of new technologies, such as AI, in combating crime – for example, for automated data analysis and biometric internet matching. Specifically, the action plan states: “The threat posed by criminal structures requires the use of technological instruments in hazard prevention and criminal prosecution. We are creating new powers for our security authorities for automated data analysis, biometric internet matching and the testing and training of IT products.”

Recommended action and conclusion on voluntary disclosure

The planned restriction of immunity from prosecution through voluntary disclosure would have far-reaching implications for tax practice and criminal defence. In future, businesses would lose the ability to correct tax risks retrospectively and remain free from punishment where all requirements are met. Preventive compliance would therefore move even more firmly into focus.

Against this background, businesses should critically review and further develop their internal processes in a targeted manner, in particular through:

• early identification and prioritisation of tax risks
• consistent further development of existing Tax Compliance Management Systems
• improved decision-making and documentation processes
• close and early coordination between the tax department and criminal defence counsel

In the long term, the ability to identify risks at an early stage and manage them in a structured manner will be decisive. Voluntary disclosure will remain a relevant instrument, but it will lose its previous protective function against criminal consequences. Businesses are therefore well advised to shift their focus consistently towards prevention, transparency and defence preparedness. We will keep you informed of further developments.

Important: The current legal situation remains unchanged until any legislative amendment enters into force. Voluntary disclosure with exemption from punishment pursuant to section 371 of the German Fiscal Code therefore remains possible, provided that all statutory requirements are met.

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