Germany is to impose stronger value added tax (VAT) penalties in relation to cases where the taxpayer has voluntarily disclosed incorrect amounts on the return. Companies detecting and correcting errors in their VAT returns has tended to be treated leniently and for relatively small sums it has been normal for any fine to be waived. In Germany a VAT return that it submitted late will lead to a fine of 10% of the VAT due up to a maximum of €25,000. In cases where the taxpayer does not pay the VAT on time the interest charge is 1% per month, together with a further interest charge on the penalties. .
Germany has now decided to be stricter in situations where a taxpayer identifies errors and makes a voluntary disclose. Taxpayers must now voluntarily disclose any errors up to 10 years after the relevant period and the maximum fine will be increased to more than the present level of €25,000. There will also be a potential 10% further charge above this limit, increasing to 15% above €100,000, and 20% above €1m.
