German U-Turn On Tax Data Disc

by Ulrika Lomas, Tax-News.com, Brussels

Monday, March 08, 2010

In a dramatic about-turn, the German government has made known its intention to press ahead with the purchase of the tax data disc offered to federal state Baden-Württemberg. The announcement follows Baden-Württemberg’s recent – and somewhat surprising – decision not to pay for the information.

According to Michael Offer, spokesman for the federal finance ministry, the government has agreed to intervene. The federal tax office in Bonn, which normally assumes merely a coordinating role, is to liaise closely with the state ministry concerned regarding the purchase of the disc, he added.

Baden-Württemberg’s state government in Stuttgart had recently announced its decision not to purchase the tax data disc, arguing that to do so may well be unconstitutional. Any action taken by the state must respect the fundamental principle of legality, it emphasized. Despite previous assurances from the government that the federal tax office in Bonn would step in to purchase the disc if the need arose, the government nevertheless reneged on its agreement initially.

The tax data disc is believed to contain the names of around 1,700 suspected tax evaders, of which 21% are believed to be from North Rhine-Westphalia, 20% from Bavaria, and only 16% from Baden-Württemberg.

It has also recently emerged that the German government has been directly approached regarding the purchase of a new data disc: this time concerning the German state of Hessen. The government has, however, confirmed that the initial decision will rest with Hessen’s state government.

Following the government’s decision back in February to sanction the purchase of stolen bank data discs, North Rhine-Westphalia elected to purchase its disc for EUR2.5m. The disc, thought to contain the names of more than 1,400 suspected tax evaders, is now in the hands of state authorities.