The German Ministry of Finance has announced that they intend to impose tighter penalties where voluntary disclosure is involved.
Generally, if a business detects errors in their German VAT returns, they may file a voluntary disclosure by which they will correct such errors. This usually results in lower fines.
Current German VAT penalty regime
Late filing: Fine of 10% of VAT due up to a cap of €25,000 at full discretion of the Tax Administration. Unpaid VAT Due: Monthly interest at 1% on the unpaid VAT. There is also a further interest charge on the penalty of 0.5% per month.
Future German VAT penalty regime
As it stands, a business may file a voluntary disclosure for errors detected up to 10 years after the event. However, this will now be reduced to 5 years.
In addition, the maximum fine caps will be extended beyond the current cap of €25,000, and there will be a potential further 10% charge of the tax due beyond this limit on late returns. This will rise to 15% above €100,000 and 20% above €1 million.