There are no serious doubts that the tax authorities may use purchased foreign bank data for taxation purposes. This was decided by the 14th Senate of the Cologne Fiscal Court in its decision of 15 December 2010 (14 V 2484/10). The Senate based its decision in particular on the decision of the Federal Constitutional Court of 9 November 2010 (2 BvR 2101/09). According to this decision, relevant information can be used in criminal tax proceedings and can justify investigations by the tax investigation department. The present decision is the first time that a tax court has confirmed the utilisation of purchased foreign bank data in taxation proceedings.
In the case decided, the tax office had learned through a tax CD purchased from informants that the applicant had invested money in a Swiss bank. Since he had not declared any foreign investment income in his income tax returns, the tax office estimated this at 5% of the account balance of almost CHF 2 million. The tax court rejected the suspension of the execution of these assessment notices requested by the applicant. Since he also did not explain in court the capital investments listed under his name on the CD and did not submit any account documents, the 14th Senate had no serious doubts about the legality of the estimate. In particular, the Senate rejected a prohibition of the utilisation of evidence with regard to the bank data unlawfully obtained abroad by the informants. Such a prohibition of use only existed in the case of serious invasions of privacy or criminal acts by the tax officials. These requirements were not fulfilled in the case at issue because the data concerned business data that had not been obtained by the tax official himself, but had merely been received by him.
The background to the legal dispute is the cases that have become known since 2008 in which the German tax authorities, partly with the involvement of the Federal Intelligence Service, were offered for sale by disloyal employees of foreign credit institutions or trust institutions (above all in Switzerland and Liechtenstein) their customer data including information on capital investments that had been mostly concealed until then. The evaluation of the tax CDs is still ongoing at the tax offices and has already led to a wave of voluntary declarations, but also to a large number of criminal investigations.
Source: Press release of the FG Cologne
Goldberg Attorneys at Law 2011
Attorney at Law Michael Ullrich, LL.M. (Information Law)
Specialist lawyer for information technology law (IT law)
E-mail: info@goldberg.de
