Insights
TAX & BUSINESS
New Tax Evasion Offence: Claiming Losses
The Fraud Prevention Act 2025 (Betrugsbekämpfungsgesetz 2025) introduces a new offence for tax evasion. Already the unlawful claiming of losses is punishable for tax returns submitted from 1 January 2026.
Under the new legal situation, the incorrect declaration of losses is already considered tax evasion, with the tax evasion being effected upon notification of the assessment in which the unlawfully claimed losses are shown. Compared with the previous legal situation, the punishability of tax evasion is therefore brought forward, regardless of whether any actual tax reduction through loss set‑off ever occurs or not.
The new regulation applies to all tax returns that are submitted from 1 January 2026 and is therefore relevant for all assessment years, provided that the relevant tax return is filed from 1 January 2026. A corresponding provision exists for cases of gross negligence.
Fine up to twice the reduced amount
The penalty range corresponds to that for intentional tax evasion or grossly negligent tax reduction. Accordingly, tax evasion is punished with a fine of up to twice the reduced amount and, in cases of gross negligence, up to the single reduced amount. In addition to a fine, imprisonment may also be imposed.
Since no tax reduction has yet occurred when losses are claimed, the value amount that determines the penalty had to be legislatively adapted and corresponds to the fictitious tax credit for the assessment year. The fictitious tax credit that would fall on this amount is calculated for natural persons according to the progressive stepped rate (excluding the tax‑free first step) and for legal persons at the corporate income tax rate.
Double punishment for later utilisation of the losses?
By penalising the claiming of unlawful losses, the question arises what financial‑criminal consequences a subsequent set‑off of the losses against profits in later assessment years would have. This later utilisation of the losses would indeed lead to a tax reduction that could be punished again. However, this might conflict with the constitutional prohibition of double punishment. It therefore remains to be seen whether this issue will be addressed by the legislature or by the courts.
The new regulation applies to all tax returns that are submitted from 1 January 2026 and is therefore relevant for all assessment years, provided that the relevant tax return is filed from 1 January 2026. A corresponding provision exists for cases of gross negligence.
Fine up to twice the reduced amount
The penalty range corresponds to that for intentional tax evasion or grossly negligent tax reduction. Accordingly, tax evasion is punished with a fine of up to twice the reduced amount and, in cases of gross negligence, up to the single reduced amount. In addition to a fine, imprisonment may also be imposed.
Since no tax reduction has yet occurred when losses are claimed, the value amount that determines the penalty had to be legislatively adapted and corresponds to the fictitious tax credit for the assessment year. The fictitious tax credit that would fall on this amount is calculated for natural persons according to the progressive stepped rate (excluding the tax‑free first step) and for legal persons at the corporate income tax rate.
Double punishment for later utilisation of the losses?
By penalising the claiming of unlawful losses, the question arises what financial‑criminal consequences a subsequent set‑off of the losses against profits in later assessment years would have. This later utilisation of the losses would indeed lead to a tax reduction that could be punished again. However, this might conflict with the constitutional prohibition of double punishment. It therefore remains to be seen whether this issue will be addressed by the legislature or by the courts.