Tax fraud and a FIOD investigation

The FIOD and the tax inspector have different roles

The FIOD describes its work as investigation in collaboration with the Public Prosecution Service. A tax audit and a criminal investigation may overlap, but are not the same. The difference may have consequences for powers, declarations and legal assistance. Therefore, ask which agency is acting, in what capacity you are being approached and what the basis for a request is. A letter about documents is not automatically an interrogation of suspects and a friendly conversation can still have a criminal law significance. (FIOD describes its work as investigation in collaboration with the Public Prosecution Service)

Our analysis starts with a process map: control, levy, administrative punishment and investigation. Place each action in the correct place, as far as known. This prevents two incorrect reflexes: giving unlimited answers to everything or ignoring every obligation because there is a suspicion somewhere. The concrete legal position requires assessment. A lawyer and tax specialist can jointly determine who communicates, what information must be provided and where a statement about possible criminal behavior deserves separate attention.

Which declaration or administration is being investigated?

Tax fraud is a collective term. The General Act on State Taxes contains tax obligations and criminal provisions, while other offenses such as forgery or money laundering can also occur. The file must be made concrete: which declaration, period, information or action is incorrect according to the Public Prosecution Service? A difference of opinion regarding tax treatment is not automatically the same as a deliberately incorrect tax return. The relevant legal conditions and facts must be investigated. (General State Tax Act)

Create an overview per tax method and period. Indicate the version submitted, subsequent correction and the source material used. If a declaration has not yet been submitted or a deadline has been extended, this must fit the factual picture. The lawyer can check whether the accusation matches the actual obligation and the right person. A general story about the entire enterprise can obscure the decisive question: who did what action at what time with what knowledge?

An additional assessment does not automatically prove criminal intent

A taxable amount can be corrected based on the correct taxation. For a criminal offense of intent, the required mental state must also be proven. Warnings, instructions, correspondence and the actual administration can become meaningful. An extensive disadvantage is not in itself a complete justification of intent. Nor is a technically complex tax subject automatically an exemption from responsibility.

Reconstruct what was known at the relevant time. What advice was requested, what facts were given to the advisor and what response followed? An advice that was based on incomplete or incorrect information may weigh differently than a carefully obtained opinion about the real facts. Don't just refer to the bookkeeper's name. The lawyer must be able to read the content and context. A defensive position becomes stronger through reliable sources and recognizable uncertainties, not by describing every problem as a misunderstanding afterwards.

Outsourcing does not exclude personal responsibility

An entrepreneur or director can outsource tax return work. This does not mean that every mistake is automatically punishable personally, but neither does it mean that the client can never be responsible. The actual division of tasks, instructions and knowledge are important. In the case of a legal entity, a separate question of leadership or personal participation may also arise under the Criminal Code. A job title does not replace specific conditions. (Criminal Code)

Collect order confirmations, information exchanges and audit agreements from the period under investigation. Ask who had access to systems and who gave approval. A shared account may raise a question of identification, but does not prove that no one was trading. It must also be examined whether different interests arise between the company, director and advisor. Jointly agreeing on one statement can be careless. Report possible conflicts of interest so that legal assistance can be organized independently and appropriately, with attention to confidentiality and the actual role of each person involved.

A source inventory prevents unintentional new errors

An investigation may involve large amounts of documents. Start with an inventory of systems, periods and responsible administrators without changing files. Keep original versions and make recognizable copies for analysis where this is lawful. A recovery entry or correction must remain visible as a later action. Backdating or silently overwriting can make the original course uncontrollable and cause new problems. The intention to put the administration in order requires clear recording.

Distinguish between missing data and data that never existed. If documents can be requested from a bank or supplier, have this done via the appropriate route. Your own overview may highlight gaps. Do not fill them with reconstructed invoices presented as originals. The lawyer and tax specialist can prioritize relevant questions. Technical system questions may require an expert; the NRGD code of conduct provides a general quality context for independent and verifiable reporting, not a guarantee that every administrative problem must be forensically investigated. (NRGD code of conduct)

A request, requisition and search are different actions

The way in which information is obtained has its own legal framework. A voluntary request is not the same as a formal request and a search requires appropriate authority. Ask what action is taking place and have the lawyer review the documents. Do not physically resist or delete data to influence the investigation. The criminal procedure rules provide guarantees, but a general reference to privacy does not make every investigative act impossible. (criminal procedure rules)

In the event of a criminal seizure, record which objects or data have been taken and which receipts are available. State necessary business continuity in concrete terms, for example access to a certain file or system for ongoing obligations. That is a different request than asking for everything back indefinitely. Protected attorney communications deserve appropriate identification and treatment. An accountant or other advisor does not automatically have the same position of confidentiality as the lawyer. Do not share confidential content unnecessarily broadly to prove its existence; discuss the correct protection with legal assistance.

Voluntary improvement is not a general way out after discovery

The Tax Authorities describe conditions for voluntary improvement. Timing and circumstances are important; not every subsequent correction counts as voluntary disclosure. The significance for a fine or criminal law also requires the applicable legal regulations. The idea that a FIOD investigation disappears as soon as payment or correction is made is therefore too general. Necessary tax compliance and criminal consequences must be carefully coordinated. (Tax authorities describe conditions for voluntary improvement)

Discuss with your lawyer and tax specialist which correction is mandatory or appropriate and how it is submitted in a recognizable manner. A recovery step cannot contain a new incorrect statement. Save previous versions and the source of the improvement. Also have the consequences for other authorities investigated if changed income or asset data are relevant there. A correction may be practically necessary without deciding every question on prior science. The value of advice lies in organizing correct compliance with a clear legal position, not in promising an automatic remission.

Tax decisions continue to exist alongside the criminal investigation

An assessment, information decision or fine may have its own response and legal remedy period. The criminal case may take longer, but does not automatically extend those periods. Therefore, create a central calendar with the competent authority, deadline and responsible advisor for each document. A payment arrangement does not automatically answer the question of whether an objection to the amount is necessary. A criminal declaration is also not the same as a full tax objection.

Align the content so that facts are not presented in a contradictory manner. This does not mean that all legal questions should receive the same answer. For example, a tax dispute about attribution may use a different criterion than a personal accusation of intent. Keep that difference explicit. Regularly ask what official decision is currently available and what is still just a research estimate. The practical peace comes from overview and division of tasks, not from the general expectation that everything will be put right automatically after the criminal hearing.

Fictional example: advice based on incomplete information

A fictitious director says that his advisor approved a certain tax treatment. The correspondence shows that the advisor assumed different facts than those that emerged later in the investigation. The advice letter can be important, but does not independently determine the knowledge or accuracy of the declaration. First it must be investigated what information the director provided, what questions were asked and who approved which version.

The lawyer and tax specialist create a chronological source list instead of just selecting the most favorable letter. If it turns out that the facts were fully shared, this may have a different meaning. The example does not provide a standard blame for the consultant or client. It shows why a name under an opinion is not the entire defense. The content, principles and knowledge at the relevant time determine which legal question actually needs to be answered.

A tax card with facts and process roles

Use the map to organize targeted cooperation between legal assistance and tax expertise. Keep sensitive information private and note the source of any conclusion. The card does not replace any obligation to provide information or criminal advice. It helps to see where an urgent deadline, recovery step or conflict of interest exists, so that it does not only become clear after an explanation or missed response that multiple procedures were running simultaneously.

• Position: person, company, capacity and concrete suspicion.
• Period: tax means, declaration version, relevant obligation and decision date.
• Knowledge: advice, shared facts, warnings and endorsements from the period.
• Administration: systems, source documents, missing data and saved versions.
• Action: request, claim, interrogation, search or criminal seizure with the basis.
• Concurrence: assessment, fine, criminal case and necessary corrections per own framework.
• Continued: advisors, conflicts of interest, secure communication and central term calendar.