Association Sanctions Act (VerSanG)

Tax evasion would be a criminal association offence. “Association” according to the VerSanG means companies, except non-profit organizations. Thus, media coverage often refer to this draft bill as “corporate criminal law”. The internal investigation would raise a large number of unresolved practical questions for simple correction cases (sec. 153 AO German General Fiscal Code – hereinafter: AO) and criminal tax investigation cases. Acknowledging the voluntary self-disclosure exempting from criminal punishment in the association sanction proceeding would intensify existing practical problems of the current disclosure rules. Together with the current tightening of (tax) criminal law (extension of limitation period for criminal prosecution, extension of criminal confiscation) a significantly tightened legal situation in Germany would arise. A formal request of the German liberal party in the German federal parliament dated February 2021 specifically asking for the consequences of the draft bill for German tax law and German tax criminal law demonstrates the specific relevance of the draft bill for German tax criminal law.

Several drafts of a corporate criminal law (2013) or Association Sanctions Act (2017) had been submitted, but not implemented. In August 2019, a draft bill of the German Federal Ministry of Justice and Consumer Protection (BMJV) for a law on "combating corporate crime" circulated. This draft contained a law on the "Sanctioning of Association-related Offences (Association Sanctions Act – VerSanG)". This draft has already been subject to partially heavy critisism by practicioners.

In April 2020, the BMJV published an amended draft bill with a new title: Act on "Strengthening Integrity of the Economy". It contained the VerSanG, as well. It now aimed at associations, whose purpose is to operate economically, and no longer provided for the dissolution of the association as the ultima ratio sanction. This draft has been subject to partially heavy critisism by practicioners, again. Until the deadline for comments on 12 June 2020 (= Friday), many practitioners submitted opinions suggesting numerous amendments of the draft bill.  

As early as 16 June 2020 (= Tuesday) and in the midst of the Covid19 crisis the BMJV published the government draft Act on Strengthening  the Integrity of the Economy. The VerSanG remained largely unchanged. With regard to internal investigations within the association, this draft bill contained the intensification that not only the association act, but also the association responsibility (i.e. the individual offender/s) must be investigated in order to achieve a reduction of sanction.

After the German Federal Government introduced this draft bill into the German Federal Council immediately after the summer break in August 2020 and the Council expressed criticism, the Government stuck to the core of this draft and brought it into the German Federal Parliament in October 2020 together with a counter-statement (Draft of the German Federal Government of a Law to Strengthen Integrity in the Economy, 21 October 2020, BT-Drs. 19/23568). Nevertheless, it promised to examine individual proposals from the Council (Draft of the Federal Government, 21 October 2020, loc. cit., appendix 5). 

In detail:

I. Tax offence as “direct” criminal association offence

The application of the proposed Association Sanctions Act (articles 1 and 15, loc. cit., hereinafter: draft VerSanG) requires that a criminal association offence is present (sec. 3 para. 1 no. 1 and 2 draft VerSanG). A criminal association offence is an offence, where the requirement of a breach of association obligations or an enrichment of the association is fulfilled (sec. 2 para. 1 no. 3 draft VerSanG). The draft VerSanG is not an association criminal law. However, regarding its practical consequences for associations, it would have core features of such an association criminal law. Thus, the word ‘criminal’ will be used hereinafter (e.g. criminal association offence).

Therefore regarding criminal tax offences (sec. 369 German General Fiscal Code, hereinafter: AO) the intentional tax understatement, so-called tax evasion (sec. 370 AO), is an association offence, if taxes of the association are affected.

Tax evasion must have been committed factually, unlawfully and culpably. It's irrelevant whether the offender is identified. On the contrary, it is sufficient that the commission of the association offence can be determined (explicitly: draft VerSanG, loc. cit., statement of reasons, p. 66, no. 3).

In contrast to the present German association sanctioning rules, the planned association sanctioning rules requires no culpable organizational violation of head personnel. It is objectively sufficient that appropriate compliance measures have been omitted, sec. 3 para. 1 no. 2 draft VerSanG (explicitly: draft VerSanG, loc. cit., statement oif reasons, p. 69, para. 1 no. 2). Compliance measures should not have any relevance if head personnel has committed an association offence (sec. 2 para. 1 no. 1 draft VerSanG). This is particularly critical regarding tax offences, because the fulfilment of the tax obligations of the association is in principle the responsibility of its legal representatives (sec. 34 AO). For this reason, tax criminal proceedings are often initiated immediately against all (former) managing directors.

Under certain conditions (sec. 2 para. 2 draft VerSanG), this also applies to foreign (tax) offences; possible use cases can be outbound cases (German parent company with foreign subsidiary, permanent establishment or else) or expats (i.e. employees of a German association working abroad).

In the event of intentional criminal association offences, the planned association monetary penalty will be (i) up to EUR 10 million (sec. 9 para 1 no. 1 draft VerSanG) or (ii) up to 10% of the average annual turnover, if the association had an average annual turnover of more than EUR 100 million (sec. 9 para. 2 no. 1 draft VerSanG). In the case of several offences an overall penalty is applied, which may not exceed twice the maximum amount provided for the individual sanction (sec. 20 para. 2 sent. 4 draft VerSanG). This would result in a maximum total penalty of EUR 20 million or 20% average annual turnover.

The gross negligent tax understatement (sec. 378 AO) does not qualify as a criminal association offence, but "only" as an administrative offence. The same applies in particular for tax endangerment (sec. 379 AO), deduction tax endangerment (sec. 380 AO), excise duty endangerment (sec. 381 AO), import and export duties endangerment (sec. 382 AO) and VAT administrative offences (sec. 26a, 26b German VAT Code). In that regard, the present German association sanctioning rules will remain applicable in the future (sec. 30, sec. 17 para. 4 German Code on Administrative Offences, hereinafter: OWiG).

In essence, the intentional and gross negligent tax understatement presupposes that a statutory obligation to file a correct, complete and timely tax return has been violated and that taxes have been consequently understated. Taxes have been understated if they are not assessed at all, not assessed in full or not assessed in time (sec. 370 para. 4 AO). Thus, the nexus for criminal punishment or administrative fining is in principle not the tax payment.

The intentional or negligent violation of the supervisory duty in associations (sec. 130 OWiG) is also not a criminal association offence, but "only" an administrative offence. In this respect, the present German association sanctioning rules remain. However, if this administrative offence at head (management) level coincides with an infringement in the form of a criminal tax offence at the working level, the planned association sanctioning rules are applicable (article 9 no. 1, cit. loc.: sec. 21 para. 3 sent. 2 draft OWiG).

II. Tax offence as “indirect” criminal association offence

German tax criminal law is special compared to other areas of German criminal law: Compliance with all tax regulations by companies (so-called tax compliance) concerns not only compliance regarding the future, but also regard to the past.

There is an obligation to notify and correct without undue delay to the competent fiscal authority if the taxable person recognises subsequently (i.e. after the submission of the tax return) and prior to the end of the tax limitation period (1, 4, 5 or 10 years) that a tax declaration, which he submitted himself or which was submitted on his behalf is inaccurate or incomplete and that this caused or could cause a tax understament (sec. 153 para. 1 sent. 1 no. 1 AO). It is particularly important in M&A cases that this obligation also applies to the successor resp. its legal representative (sec. 34 AO) and authorised persons (sec. 35 AO), sec. 153 para. 1 sent. 2 AO. 

The intentional violation of this obligation to notify and correct by obliged individuals – primarily legal representatives of the association (e.g. managing directors) – constitutes a criminal tax evasion by omission by these individuals (sec. 370 para. 1 no. 2 AO), even if they were in good faith regarding the affected tax returns of their association or if they became representatives only after the submission (e.g. by appointment as borad members)!

This constitutes a criminal association offence (sec. 2 para. 1 no. 3 draft VerSanG), as well. This leads to the sanctioning of the association, as well (sec. 3 para. 1 no. 1 draft VerSanG).

Thus, German tax criminal law also has an ‘indirect’ nexus to the planned association sanction pursuant to the draft VerSanG. Even in corporate criminal cases, in which tax is not in focus, criminal punishment risks may, by its internal investigation, arise for the association, its legal representatives and employees. This is e.g. because of sec. 40 AO: It is irrelevant for taxation, whether a conduct, which fulfilles a certain tax law partially or totally, violates a legal requirement or prohibition or morality.

Example: If, in the course of internally investigating a corruption case in an association, it turns out that the association has claimed operating expenses as tax deductions in its tax returns in the past (e.g. bribe payments), even though this has not been allowed anymore for many years (sec. 4 para. 5 sent. 1 no. 10 German Income Tax Act, sec. 8 para. 1 sent. 1 German Corporate Income Tax Act), this triggers the notification and correction obligation without undue delay (sec. 153 AO) whern gaining knowledge. If the legal representatives of the association do not comply with this indirect consequence of the internal investigation, as well, they commit a criminal association offence. In addition to the individual criminal punishment of the legal representatives because of tax evasion by omission (sec. 370 para. 1 no. 2 AO), this event triggers the responsibility of the association (sec. 3 para. 1 no. 1 draft VerSanG), as well.

III. Internal investigations

The draft VerSanG sounds promising regarding internal investigations (sec. 16 draft VerSanG) by the association itself or third parties commissioned by the association at first glance:

If this investigation is carried out in accordance with the law, the court should reduce (sec. 17 para. 1 draft VerSanG) the sanction against the association, i.e. in particular the monetary sanction against the association (sec. 9 draft VerSanG). If the court reduces the monetary sanction in this respect, the maximum statutory amount of the monetary sanction against the association (sec. 9 para. 1-3 draft VerSanG) is reduced by half and the minimum statutory amount is not applicable (sec. 18 sent. 1 draft VerSanG). The publication order rgarding the conviction of the association (sec. 14 draft VerSanG) is excluded. However, the victim of tax evasion is exclusively the fiscal body. Thus, it is doubtful whether a publication order ist at all applicable in tax investigation cases.

At second glance, however, planned framework does not sound that promising anymore:

Internal investigations are only compliant with the law if they meet several criteria, which are currently very general (sec. 9 para. 1 no. 1-5c draft VerSanG) and some of which must also be documented vis-a-vis the investigation authorities.

In particular, the association or the third party commissioned by the association must have contribute significantly to the detection of the criminal association offence and responsibility (sec. 17 para. 1 no. 1 draft VerSanG) and must have cooperate uninterruptedly and unrestrictedly with the prosecution authorities (sec. 17 para. 1 no. 3 draft VerSanG). This gives rise to two special features for tax criminal law:

1. Simple correction cases

Due to the above-mentiond notification and correction obligation (sec. 153 AO), corporate executives and employees as well as external advisors should be particularly prudent in the case of tax-relevant doubt issues surface. If, for example, it is initially planned to conduct the correction as a simple tax correction procedure (sec. 153 AO), and then, in the further course of the project, questions arise in the context of tax criminal law, the additional requirements of the voluntary self-disclosure exempting from criminal punishment (sec. 371, 398a AO) must be observed (see below: V.). It should also be noted that this simple tax correction project could "transform" into an internal association investigation, which then raises a series of practical follow-up questions:

• When does the association have to disclose itself to which authority and how?
• Is this timetable in line with the requirement of sec. 153 AO (without undue delay)?
• What should be considered when interviewing employees about the cause of the error?
• How does all this have to be documented?
• How do voluntary self-disclosure and internal investigation compare: May the investigation wait until the effectiveness of the voluntary self-disclosure is clarified?
• Or should one proceed “two-pronged”, e.g. due to the foreseeable course of time or otherwise feared impairment of the purpose of the investigation?
• Even if "two-pronged" action is taken, should the entire period of the voluntary self-disclosure be examined, which can be 10, 15 or even more years?
• And what should the association do resp. what may it be required to do, if it or its external advisor discovers that the voluntary self-disclosure is incomplete in terms of personnel, time or content?
• Does uninterrupted and unrestricted cooperation also mean that the association must make an advance payment without undue delay on the expected additional tax burden?

2. Tax criminal investigation cases

For example in a corruption case committed by an employee, it may be regularly the case that the association, its external advisor and the law enforcement authorities proceed jointly.

In tax investigation cases the interests of prosecution authorities – usually the investigation departments of the tax authorities (sec. 23 draft VerSanG in connection with sec. 386 AO, art. 10 no. 8 loc. cit.: sec. 208 para. 1 sent. 1 no. 1 draft AO) of the fiscal authorities – and the association are not necessarily that identical:

If the association or its external advisor discuss with the tax investigation department regarding facts for a tax estimate in the tax assessment proceeding to conclude an agreement on the facts and its treatment in the sanctioning proceeding, the association would constantly be confronted with alleged obstruction of the investigation.

IV. Voluntary self-disclosure

Section 5 no. 1 VerSanG-Reg-E links the sanctioning of associations with the voluntary self-disclosure exempting from criminal punishment (sec. 371, 398a AO). Additionaly, there are two more similar concepts in German law: voluntary self-disclosure exempting from administrative fines (sec. 378 para. 3 AO) and rescission from attempt exempting from criminal punishment (sec. 24 German Criminal Code, hereinafter: StGB).

According to that provision, an association sanction is not imposed on the grounds of a criminal association offence 'which cannot be prosecuted because a criminal punishment is excluded or annulled" (highlighted by the author). According to the draft VerSanG's reasoning (loc. cit. p. 70 f. no. 1), this expressly refers to the voluntary self-disclosure pursuant to sec. 371, 398a AO by the offender of the criminal association. This might be correct at first glance, because this voluntary self-disclosure is an individual reason for the rescission of the individual criminal punishment. However, this link transfers the already existing application risks of the voluntary self-disclosure in corporate cases into the draft VerSanG and in some cases further aggravates these application risks. In the following two sectiona below, only selected application risks of the voluntary self-disclosure exempting from criminal punishment are discussed. Additionally, there are more application risks (e.g. the requirement of temporal and content completeness, sec. 371 para. 1 AO, see below VI. 2.): 

1. Multiple persons responsible

Tax violations in associations often concern ongoing matters (e.g. in the areas of VAT and/or wage tax) and go back years. Corporate executives and employees have changed frequently over these years. In practice, this regularly results in completely different risk profiles for criminal tax law purposes, which should be detected and examined in each individual case. Example: executive board members or managing directors:

• The current executive board members or managing directors, who are new in their role for the association, there is no criminal tax law risk regarding the association’s original false tax returns (hereinafter: legacy risk), but a criminal tax law risk (omission) regarding the notification and correction obligation without undue delay (hereinafter: present risk). They can - better: must - "play freely".
  
• In addition, there are current executive board members or managing directors who have been in theor role for the association already for a longer period of time. Thus, they have a higher legacy risk. Additionally, they have a present risk, which is individually pronounced. They are "hung".
• Furthermore, former executive board members or managing directors have to be observed. In a worst case, they meanwhile work for a competitor. They have a legacy risk, as well, which is individually pronounced, and usually no present risk.
  

From the point of view of the association, the entire participation of all (former) executive board members or managing directors in the voluntary self-disclosure is usually recommendeable to reduce association sanction risks under the present sanctioning rules. However, their inclusion makes the preparation of voluntary self-disclosure more complex and can even jeopardize it in individual cases if a former executive board member or a former managing director now works for a competitor as in the above example. In the future, under the verSanG, it would be expected that the prosecution authorities would carefully examine the voluntary self-disclosure to determine whether all those former responsible individuals participate, as well. If there is a "gap" in this respect, the authorities would have siginificant negotiating power in the sanction proceeding against the association, as well. In the run-up to the submission of simple corrections (sec. 153 AO) or voluntary self-disclosures, the questions will therefore even more arise, to what extent the "protective shield" – ‘only’ as a precautious, prudent measure (preventively) – is stretched and whether this is done openly or covertly vis-a-vis the authority.    

This conflict of interests – current ‘bona fide’ responsible individuals (obligation to act without undue delay in accordance with sec. 153 AO) vs. former "malicious" responsible individuals (need for voluntary self-disclosure) – is also particularly pronounced in cases where the voluntary self-disclosure is barred, e.g. because of an effective ongoing tax field audit. In these cases, the so-called third-party disclosure exempting from criminal punishment (sec. 371 para. 4 AO) is intended to remedy this situation. However, according to the prevailing opinion, it is not intended to protect those former responsible individuals, whose 'bad faith' is that they have knowingly violated the association’s obligation to submit correct tax returns.

The draft VerSanG intensifies this conflict of interests. In addition to the (former) corporate executives and employees, who face the risk of criminal punishment for tax evasion, the association itself becomes a ‘3rd party’, which faces an association sanction for the tax evasion of the aforementioned individuals. The association gets caught between the ‘fronts’: to comply with the law and not to create an additional sanction risk, i.e. in order to comply with the notification and correction obligation, the association must in principle incriminate itself and trigger a sanction against itself. Insofar, it should be noted: According to the decision in principle of the 1st Senate of the German Federal Court of Justice responsible for criminal tax offences (17.3.2009, 1 StR 479/08, margin no. 29) there may be a prohibition from using or utilizing evidence if the taxable person is forced by the notification and correction obligation (sec. 153 AO) to incriminate himself with regard to previous criminal misconduct without having the possibility of voluntary self-disclosure, e.g. because disclosure is barred. Thus, according to the view put forward here, the information resulting from the disclosure, which the association nevertheless performs, may not be used to initiate a sanction proceeding against this association, in which the association or its representative may remain silent (sec. 33 para. 1 sent. 1 draft VerSanG). 

2. Multiple “surcharge”

Sec. 5 no. 1 draft VerSanG also incorporates the following problem of the voluntary self-disclosure:

The voluntary self-disclosure exempting from criminal punishment is barred, i.e. does not exempt from criminal punishment, if the understated tax exceeds EUR 25,000 per criminal offence (sec. 371 para. 2 sent. 1 no. 3 AO); this does not apply to cases of correction of monthly VAT returns and wage tax returns. This is a regular case for associations, because tax understatements in a corporate context are regularly about higher amounts. In these cases, the abandonment of prosecution in accordance with sec. 398a AO remains the only way out for the (former) corporate executives and employees. This requires the payment of a sum of money (sec. 398a para. 1 no. 2 letters a-c AO):

• 10% if the evasion amount is less than/equals EUR 100,000,
• 15% if the evasion amount is greater than EUR 100,000 and less than / equals EUR 1,000,000,
• 20% if the evasion amount is greater than EUR 1,000,000.

That mechanism should also apply to proceedings under the VerSanG (art. 10 no. 13 loc. cit.: sec. 398a para 1 draft AO). This means that associations would also be protected from a sanction under the VerSanG if the conditions laid down in sec. 398a AO are met. This sounds good at first, but:

According to the authoritative view, the conditions laid down in sec. 398a AO are only met if: every offender has paid the above-mentioned amount of money, whereby this is required independently whether or not the offender has obtained an individual advantage from this offence.

Example: An association has falsely claimed operating expenses in its corporate and commercial tax returns for one year. This results in additional tax payments for the association in the amount of EUR 1,500,000. Each involved (former) corporate executive and (former) employee must raise EUR 300,000 each in order to bring his/her individual criminal tax investigation proceeding to an end. Especially employees often do not want or can not pay such amounts. The association is then stuck again, because the assumption of such costs in order to avert an association sanction would have further implications, in particular regarding wage tax and corporate or criminal law.

Alternatively, the association would have the possibility to aim for lower payments under sec. 153a  German Code on Criminal Procedure to ensure that individual tax criminal proceedings are brought to an end. However, this abandonment of charges does not protect against the association sanction.

V. Current developments in German tax criminal law: Annual Tax Act 2020

The German Annual Tax Act (JStG) 2020 entered into force on 29 December 2020. The JStG 2020 affects the draft VerSanG if the draft bill enters into force in its current form. There would be an impact on the prosecution of criminal association offences (tax evasion) with regard to the statute of limitation regarding criminal prosecution (hereinafter: 1.) and the voluntary self-disclosure exempting from criminal punishment (hereinafter: 2.). In addition, the confiscation must be observed (hereinafter: 3.).

1. Extension of the limitation period for criminal prosecution

Relative deadline

The JStG 2020 increased the relative limitation period for prosecution in cases of particularly serious tax evasion (sec. 370 para. 3 sent. 2 no. 1-6 AO) (from 10) to 15 years (sec. 376 para. 1 AO new version).

Particularly serious tax evasion may be more frequent in corporate contexts than one might think at first: for example, a particularly serious tax evasion is given, if the evaded tax amount exceeds EUR 50,000 (sec. 370 para. 3 sent. 2 no. 1 AO: "large extent", uniform value limit for tax evasion in accordance with sec. 370 para. 1 no. 1 and no. 2 AO, German Federal Court of Justice, judgement of 27 October 2015, 1 StR 373/15). This value limit, which must be present for each assessment period (the compensation prohibition pursuant to sec. 370 para. 4 sent. 3 AO does not apply in this respect), is regularly quickly reached in corporate contexts.

This extended period is applicable regarding all tax evasions, which were not yet criminally time-barred on 29 December 2020.

The planned link between the limitation period for the association sanctioning with the limitation period for the criminal association offence (sec. 21 para. 1 sent. 1 draft VerSanG) means that the limitation period for the association sanctioning for particularly serious tax evasion will be 15 years, as well.

Absolute deadline

The so-called German Second Covid19 Tax Assistance Act of June 2020 has already set the absolute limitation period of prosecution for particularly serious tax evasions on the two-and-a-half times of the (relative) limitation period as of 1 July 2020 (sec. 376 para. 3 AO new version. This is practically relevant because the (relative) limitation period is interrupted by certain investigative measures (e.g. the announcement of the initiation of an investigation), i.e. starts over again (sec. 369 para. 2 AO, sec. 78c para. 3 sent. 1 StGB), and the "trigger" for this is in the hands of the investigation authorities. Therefore, the absolute period of limitation of prosecution for the particularly serious tax evasion extends (from 25) to 37.5 years. In specific especially severe cases, in which the criminal proceeding has been opened at district court level, the period of limitation pauses for up to 5 years (sec. 376 para. 1 Hs. 2 AO, sec. 78b para. 4 StGB). In these cases even 42.5 years at most are available for the investigation into criminal association offences in the form of particularly serious tax evasion and, therefore, for this prosecution of associations.

Because of the above-mentioned link regarding the prosecution of an association for a criminal association offence in the form of a particularly serious tax evasion, this new rule would have to be considered in future sanction proceedings under the VerSanG.

2. Requirement of completeness in case of voluntary self-disclosure exempting from criminal punishment

According to the legal situation not changed by the JStG 2020 on the so-called positive conditions of effectiveness of the voluntary self-disclosure exempting from criminal punishment, the incorrect or incomplete information relating to all tax criminal offences of a tax type, which are not barred by the statute of limitation, but at least for the last ten calendar years, have to be corrected (sec. 371 para. 1 sent. 2 AO).

The above-mentioned extension of the limitation period for criminal prosecution to 15 years is applicable to all criminal offences, which have not yet become time-barred at the time of its entry into force (29 December 2020, BT-Drs. 19/25160, 10 December 2020, p. 228, no. 29 - new) according to the 'old' law (sec. 376 para. 1 old version: 10 years). This already now means that, in a simplified view, all particularly serious tax evasion accomplished on 30 December 2010 onwards, would have to be observed. All particularly serious tax evasions, which were accomplished earlier, are, in a simplified view (i.e. without suspension or interruption events) already time-barred according to the ‘old’ law. The above-mentioned extension of the limitation period will have full impact on the above-mentioned requirement of timely completeness of the voluntary self-disclosure of the offender in such cases from 29 December 2025 onwards.

For the associations a different timeline applies: The draft VerSanG is to apply only to criminal association offences committed after its entry into force (sec. 3 para. 3 draft VerSanG, sec. 1 StGB). If the draft VerSanG came into force in 2023, the above-mentioned extension would affect the above-mentioned completeness requirement of voluntary self-disclosures in particularly serious tax evasion cases and thus the prosecution of the association regarding these criminal association offences (sec. 5 no. 1 draft VerSanG) – in contrast to the prosecution of the offender – probably from 2038 onwards.

These new timelines regarding the voluntary self-disclosure for both the individual offender and the association are expected to increase the complexity of their preparation again. Additionally, practical difficulties will arise if e.g. the tax period of ten years of retention (sec. 147 para. 3 AO) is not correspondingly adapted.

3. Extension of criminal confiscation

The JStG 2020 eliminated sec. 375a AO, which allowed the collection of tax claims that have already been extinguished by the statute of limitations and  which was only recently introduced by the so-called Second Covid19 Tax Aid Act in summer 2020, and transferred this rule into the German Criminal Code (sec. 73e para. 1 sent. 2 StGB). In tax evasion cases, therefore, also amounts, which are time-barred for tax collection purposes, may be confiscated.

This criminal confiscation is, under certain conditions, (sec. 76a para. 2 sent. 1 StGB), allowed independently (objective proceeding). The criminal limitation period in this respect is at least 30 years (sec. 76b para. 1 sent. 1 StGB).

The JStG 2020 retroactively applies a new confiscation mechanism – the (independent) recovery of amounts, which are already time-barred for tax and criminal prosecution purposes, for at least 30 years – to particularly serious tax evasion on a large scale (more than EUR 50,000, sec. 370 para. 3 sent. 2 no. 1 AO): sec. 316 Introduction Act to the German Criminal Code, EGStGB.

If the VerSanG in its current form also enters into force in the future, this confiscation mechanism will also be relevant in cases where the criminal association offence committed after this point in time qualify as particularly serious tax evasion on a large scale. The current government draft bill, which also contains the VerSanG, provides in art. 8 para. 1 for a sec. 73b para. 1 sent. 2 draft StGB, which is probably supposed to ensure that in all cases where future association sanctions are possible, the confiscation of proceeds from the association is also possible. This demonstrates that the German legislator is aware of this 3rd dimension (besides the limitation periods for tax and criminal prosecution purposes) for future sanction proceedings against associations under the VerSanG, as well.