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TAX & BUSINESS
Newly Regulated Short‑fall Surcharge
If a tax audit by the tax office results in a tax arrears assessment, this can also trigger suspicion of a criminal tax offence.
In principle, a criminal tax proceeding would have to be initiated in this case. Under the Financial Criminal Law (FinStrG) this can be waived and, instead, a flat short‑fall surcharge may be prescribed. If this surcharge is paid in full and on time, it has a de‑criminalising effect. The Fraud Prevention Act 2025 has considerably broadened the scope of application of the short‑fall surcharge.
Additional assessments of up to EUR 100,000
The tax authority is entitled to impose a short‑fall surcharge where, as a result of additional assessments during a tax‑law review, there is suspicion of a tax offence and these additional assessments do not exceed EUR 33,000 for one year (one assessment period) and EUR 100,000 in total. The short‑fall surcharge and the underlying tax arrears must be paid in full within one month of their assessment. For the tax arrears underlying the short‑fall surcharge, the one‑month period may be extended to a maximum of six months by granting payment relief. No deferral may be granted for the surcharge itself; it must be paid in full within the one‑month period.
Agreement with the financial criminal authority
If the total amount of the assessed additional taxes is at most EUR 50,000, the short‑fall surcharge is 10 % of the additional‑tax amount. If the total amount exceeds EUR 50,000, the surcharge is uniformly set at 15 % of the entire additional‑tax amount and is not applied only to the portion above the threshold. Where a result of more than EUR 100,000 is intended and a measure under the FinStrG is to be taken, the implementation decree requires that agreement with the financial criminal authority be obtained beforehand.
There are various exclusion grounds for the short‑fall surcharge. For example, the assessment is unlawful if a criminal tax proceeding is already pending for the taxes concerned or a voluntary disclosure has been made, or if punishment is required to deter the offender from further tax offences.
Immunity for tax offences
If the short‑fall surcharge and the underlying tax arrears are actually paid in full with the effect of relieving liability, immunity from prosecution applies to the tax offences associated with those arrears. Should, for instance, a subsequent appeal lead to a reduction of the tax arrears on which the surcharge was based, the surcharge must also be retroactively reduced ex officio.
Additional assessments of up to EUR 100,000
The tax authority is entitled to impose a short‑fall surcharge where, as a result of additional assessments during a tax‑law review, there is suspicion of a tax offence and these additional assessments do not exceed EUR 33,000 for one year (one assessment period) and EUR 100,000 in total. The short‑fall surcharge and the underlying tax arrears must be paid in full within one month of their assessment. For the tax arrears underlying the short‑fall surcharge, the one‑month period may be extended to a maximum of six months by granting payment relief. No deferral may be granted for the surcharge itself; it must be paid in full within the one‑month period.
Agreement with the financial criminal authority
If the total amount of the assessed additional taxes is at most EUR 50,000, the short‑fall surcharge is 10 % of the additional‑tax amount. If the total amount exceeds EUR 50,000, the surcharge is uniformly set at 15 % of the entire additional‑tax amount and is not applied only to the portion above the threshold. Where a result of more than EUR 100,000 is intended and a measure under the FinStrG is to be taken, the implementation decree requires that agreement with the financial criminal authority be obtained beforehand.
There are various exclusion grounds for the short‑fall surcharge. For example, the assessment is unlawful if a criminal tax proceeding is already pending for the taxes concerned or a voluntary disclosure has been made, or if punishment is required to deter the offender from further tax offences.
Immunity for tax offences
If the short‑fall surcharge and the underlying tax arrears are actually paid in full with the effect of relieving liability, immunity from prosecution applies to the tax offences associated with those arrears. Should, for instance, a subsequent appeal lead to a reduction of the tax arrears on which the surcharge was based, the surcharge must also be retroactively reduced ex officio.