StartCriminal tax lawCommercial Criminal LawSocial Security Fraud

Social Security Fraud (Undeclared Earnings and Illegal Employment)

Investigations by the Tax Investigator / Illegal Employment Task-Force (Customs Inspection) due to illegal employment and undeclared work (social security fraud and tax fraud) - Advice / representation by an experienced tax law specialist (tax attorney), defence attorney, tax adviser!

Most employers underestimate the financial claims entailed by illegal employment (work for cash in hand) if it is discovered. Due to the long limitation period of 30 years and the extrapolation of paid net wages to a gross wage, which forms the calculation base for contributions by the employee and the employer, by the social security administration the financial liability alone is often devastating. In addition, payment of income taxes withheld will be demanded from the employer by way of payroll tax liability. For both of the claims to be recovered (payroll tax and social security contributions), the employer cannot demand redress from the employee. The employees, as far as their names are known, even stand to benefit from retroactive contributions remitted by the employer. Employees are thus put in a position as if the amounts would have been paid by them, without any subsequent economic ramifications. We would like to explain some of the details on this page. 

Legal Advice and Representation: LHP Attorneys assist in investigative proceedings

The number of investigations into illegal employment has continuously increased over the last years. The total amount of damages assessed has also increased in-line with the number of investigative proceedings. The quantification of damages is often disputed, because their assessment is frequently based on arbitrary assessments. The penalty is subsequently calculated on the basis of these arbitrary assessments.

With illegal cash payments made to employees, an employer may, in accordance with § 370 AO, be liable for criminal prosecution for the offence of (income) tax evasionand withholding social security contributionsin accordance with § 266a StGB. These are two separate offences that will be assessed independently of each other, so-called joinder of offences (BGH of 21.09.2005, Az. 5 StR 263/05). Should a criminal (tax) investigation be commenced against you, or if the Customs Inspector has conducted a search of premises, it is important to act quickly and avoid mistakes. It is therefore helpful to instruct an attorney/ tax adviser/ tax law specialist at an early stage for the purpose of preparing a defence.  

Facts and information on proceedings for undeclared work and illegal employment

The option of contesting arbitrary assessments and thereby significantly mitigating the damage is available in a large number of cases where such arbitrary assessments have been used. LHP Attorneys inform on the basic definitions, scope of penalties and limitation periods.

1. Understanding the basics of proceedings for undeclared work, illegal employment

2. Payroll tax fraud and withholding of social security contributions

3. Assessment of the penalty on the basis of gross salary and net pay agreements - partial cash earnings and mini-jobs

4. Defence against an arbitrary assessment / Illegal Employment Task-Force

5. Limitation periods for social security fraud and payroll tax fraud in the case of illegal employment

Services

  • Representation towards the tax investigation or the tax investigation department and the department of public prosecution
  • Exchange with your current tax adviser
  • Immediate assistance during a house search
  • Effective criminal defence in investigation proceedings and in criminal proceedings after an indictment

Advantages

  • Long-standing team of experienced defence lawyers, especially, in commercial criminal cases
  • Multiple qualifications as lawyer, tax adviser, tax law specialist and certified criminal tax law adviser (DAA)
  • Far-reaching experience in criminal proceedings and in dealing with the investigation authorities (police, customs and department of public prosecution) and the criminal courts
  • Always up-to-date regarding the development of new laws and the decisions of the German Federal Court as a result of professional training and further training courses
  • Psychological know-how and tact in dealing with difficult situations with investigation authorities (police, customs and department of public prosecution) and the criminal courts.
  • Long-standing lecturing experience, e.g. as a conference chairman of specialist events on criminal tax law as well as publications in relevent technical journals and comments
LHP: Attorneys at Law, Tax Law Specialists, Tax Advisers PartmbB

Cologne

An der Pauluskirche 3-5, 50677 Cologne,
Telephone: +49 221 39 09 770

Zurich

Tödistrasse 53, CH-8027 Zurich,
Telephone: +41 44 212 3535