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HomePracticesTax Disputes, White-Collar & Compliance
Practice 04

Tax authority, prosecutor, regulator: handled, not feared.

A German subsidiary brings German enforcement exposure: tax audits that reach back years, criminal provisions that attach to individuals, and compliance duties the parent may never have mapped. We defend international groups and their managers in tax disputes and white-collar matters — and build the compliance structures that prevent them.

Book an orientation call Frequently asked questions
§ I — Context

German enforcement is procedural — and the procedure can be used

The German tax system enforces through the Betriebsprüfung — the field audit of a company's books, which routinely covers several past years. Findings become tax assessments; assessments can be challenged by objection (Einspruch) with the Finanzamt and then litigated before the Finanzgericht (fiscal court, FG) and, on points of law, the Bundesfinanzhof (BFH). Each stage has short statutory periods — typically one month for the objection — and a missed period converts a defensible assessment into a final one. For foreign parents, transfer pricing and intra-group charges are the most common audit battlegrounds.

The criminal layer is closer than many groups expect. Sec. 370 AO makes tax evasion a criminal offence — including evasion by omission, which can capture incomplete filings of a poorly supervised subsidiary. Sec. 371 AO offers the Selbstanzeige, a voluntary self-disclosure that can lead to immunity if it is complete and timely; done incompletely, it becomes evidence. When a Durchsuchung (dawn raid) reaches a German office, the first hours decide what the proceeding will look like — who speaks, what is sealed, which documents are privileged.

We defend companies and individuals in audits, objection and fiscal-court proceedings and criminal tax matters, manage dawn-raid response, and conduct internal investigations. On the preventive side we build compliance systems sized for Mittelstand-scale subsidiaries — including the foreign-trade dimension under the AWG/AWV, where export-control and investment-screening duties carry their own sanctions. The recommended step before any audit or filing decision: a written assessment of exposure, because in German enforcement the procedural posture is half the defence.

§ II — Services & scenarios

What we handle — and in which situations.

Services

  • Tax audit defence — strategic management of the Betriebsprüfung: information flow, findings negotiation, closing-meeting strategy.
  • Objection and fiscal-court litigation — Einspruch proceedings with the Finanzamt, litigation before the Finanzgericht and, on points of law, the BFH.
  • Criminal tax defence — defence of companies and individuals in proceedings under secs. 370 et seq. AO and the StGB.
  • Self-disclosure — assessment and preparation of a Selbstanzeige under sec. 371 AO, where completeness decides between immunity and evidence.
  • Dawn-raid response — immediate on-site and remote support during searches of German offices, privilege protection, employee guidance.
  • Internal investigations — fact-finding in the German entity, structured for use toward authorities and within the group.
  • Compliance systems — risk-based compliance programmes for German subsidiaries, including foreign-trade duties under the AWG/AWV.
  • Management protection — advising locally appointed and expatriate directors on personal exposure in tax and criminal matters.

Typical scenarios

  • The German Finanzamt opens a field audit at the local subsidiary of a foreign group and challenges five years of intra-group management fees.
  • Prosecutors search the Munich office of an international company at 7 a.m.; the parent's GC needs German defence counsel on site the same morning.
  • A new CFO discovers that VAT filings of the German entity have been incomplete for years and asks whether a self-disclosure under sec. 371 AO is still possible.
  • A foreign-appointed managing director is named personally in a German criminal tax investigation.
  • A group with sensitive technology exports needs its German subsidiary's processes checked against AWG/AWV foreign-trade and screening duties.
  • An assessment after an audit would cost EUR 2.4 million; the company needs a litigated challenge before the Finanzgericht.
§ III — Statutes & forums

The legal framework.

AO § 370
The Fiscal Code's central criminal provision: tax evasion, including by omission. It attaches to individuals — directors and responsible officers — not only to the company.
AO § 371
The voluntary self-disclosure (Selbstanzeige): complete and timely disclosure of evaded taxes can lead to immunity from prosecution. Incomplete disclosure forfeits the protection and supplies evidence.
StGB
The Criminal Code — the basis for white-collar offences beyond tax, such as fraud and breach of trust, which frequently accompany tax proceedings against management.
AWG / AWV
The Foreign Trade Act and Ordinance: export-control and investment-screening rules with their own sanction regime — a compliance field that foreign-owned German entities often underestimate.
Finanzamt / FG / BFH
The tax enforcement track: assessment by the Finanzamt, objection (Einspruch) within the statutory one-month period, litigation before the Finanzgericht, and points of law before the Bundesfinanzhof.
RVG
The Lawyers' Remuneration Act — in court proceedings its statutory fees form the floor, which keeps the cost of a litigated tax challenge calculable.
§ IV — How we start

How an engagement begins.

01

First contact

Call or write — in acute matters such as a search, we prioritise same-day response. Otherwise we reply within one business day and offer a free 30-minute orientation call.

02

Legal assessment

We map exposure, deadlines and procedural options in writing — at a fixed fee from EUR 1,500 plus VAT.

03

Mandate

Defence and litigation mandates run on hourly rates, a fixed fee for defined phases, or a fee agreement under sec. 3a RVG.

04

Ongoing support

Audits and investigations run for months or years. We hold the line to the authorities, keep privilege intact and report to the group in English.

From practice
The file the authority builds in the first weeks is the file the court reads in year three. Shape it early.
Dr. Carolin Hoffmann · Partner
§ V — Team

Your contacts in this practice.

Partner

Dr. Carolin Hoffmann

Tax Disputes, White-Collar Crime & Compliance · München

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Associate

Lukas Brenner

Tax Disputes, White-Collar Crime & Compliance · München

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§ VI — Fees

Clear before the engagement begins.

Enforcement matters are stressful enough without fee surprises. We agree the model per phase — audit, objection, court, defence — and keep the group's budget owner in the loop.

  • Orientation call — 30 minutes, free of charge: exposure, deadlines, immediate protective steps.
  • Legal assessment — a written exposure analysis (audit position, self-disclosure feasibility, raid readiness) at a fixed fee from EUR 1,500 plus VAT.
  • Mandate — hourly rates, a fixed fee per procedural phase, or a fee agreement under sec. 3a RVG.
  • Court proceedings — before the Finanzgericht and in criminal proceedings, the statutory fees under the RVG form the floor; we do not undercut them.
§ VII — FAQ

What clients ask first.

The Finanzamt announced an audit of our German subsidiary. How should we prepare?

Treat the announcement as the start of the proceeding, not a formality. Before the auditors arrive: define a single information channel, review the years in scope — especially intra-group charges and transfer-pricing documentation, the standard battleground for foreign-owned entities — and identify weak points internally before the auditor does. Documents handed over casually cannot be taken back, and statements by unprepared employees shape findings. We structure the audit from day one: who answers, what is produced when, and which findings are contested at the closing meeting rather than conceded along the way.

What is a Selbstanzeige and is it an option for us?

The Selbstanzeige under sec. 371 AO is a voluntary self-disclosure of evaded taxes that can lead to immunity from criminal prosecution — a remarkable instrument by international standards. Its conditions are strict: the disclosure must be complete across the relevant periods and must arrive before the authorities have discovered the facts or opened proceedings. An incomplete or late disclosure loses the protection and hands the authority a confession. Whether the route is open is therefore a careful factual assessment, done under privilege, before anything is filed. We evaluate feasibility first and only then prepare the disclosure itself.

What should our German staff do during a dawn raid?

Three rules carry most of the weight: cooperate calmly without volunteering, do not delete or remove anything, and call defence counsel immediately — searches are typically run early in the morning precisely to find the entity unprepared. Employees should confirm identities and the search warrant's scope, accompany the officers, and avoid substantive statements; nobody is obliged to actively explain documents. Legally privileged material should be identified and contested on the spot. We provide a short raid protocol for German subsidiaries in advance and respond on site or remotely when a search actually happens.

Can our managing director be personally liable for the subsidiary's tax issues?

Yes. German tax and criminal law attach to the responsible individuals: managing directors are personally responsible for the entity's tax filings, and sec. 370 AO captures evasion by omission — including filings a director signed without understanding. Personal liability for unpaid taxes can follow alongside the criminal exposure. Foreign-appointed directors who rely entirely on local staff or external accountants remain responsible for supervision. We advise directors on their personal position — separately from the company where interests may diverge — and build the supervision and sign-off structure that demonstrably meets the duty.

What compliance obligations does our German entity actually have?

There is no single German compliance statute; duties arise from tax law, criminal law, foreign-trade rules under the AWG/AWV, data protection and sector regulation. What German enforcement practice expects is a risk-based system: documented responsibilities, controls matching the entity's actual risk profile, and evidence that management supervises it. For foreign-owned entities the recurring gaps are intra-group payment flows, export-control screening and unclear delegation between parent and local management. We audit the existing setup against the entity's real exposure and close the gaps with structures a Mittelstand-scale organisation can actually operate.
§ VIII — Insights

Articles on this practice area.

Articles on German tax audits, criminal tax law and corporate compliance appear in our knowledge base.

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Audit letter, investigation, raid? The first response sets the course.

Procedural positions harden quickly in German enforcement. Contact us — we reply within one business day, faster in acute matters.

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BRANDT & FALK Rechtsanwälte is a German business-law firm with offices in Munich and Berlin. The content of this website is general information about our fields of work and does not constitute legal advice. An attorney–client relationship is established only by a separate engagement agreement. Unless stated otherwise, all fees are quoted plus statutory VAT. Our lawyers are admitted to the bar in Germany; advice on foreign law is provided by independent local partner firms.