Tax evasion – When does it reach the statute of limitation?

Tax evasion is subject to a limitation period of 10 years and in case of unintentional tax fraud 5 years. However, the limitation period only starts at the end of each year, in which a tax return is filed. If a tax return is not filed, the limitation period only starts after 3 years, i.e. the tax authorities can go back for 13 years in such a case. Furthermore, there is no limitation period in case of evaded foreign investment income from non-EU countries, provided that there is no automatic Tax Information Exchange Agreement (TIEA) with the concerned country. The above-mentioned limitation period only starts running once the tax authorities have knowledge of the tax evasion or alternatively, 10 years after the evaded income was earned. As a consequence, taxes on evaded foreign income can be imposed with retroactive effect for a period of up to 20 years. Since generally neither investors nor banks keep records for such a long time, the evaded tax is generally estimated, and always at the expense of the taxpayer. If the estimation is too much, the excess tax must be paid. If the estimation is too low, there is a risk that the self-disclosure will not be accepted.

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