German Ministries Launch Action Plan Against Tax and Financial Crime, Including Crypto Assets and Harsher Penalties

The German Federal Ministry of Finance (BMF) and the Federal Ministry of Justice and Consumer Protection (BMJV) have jointly presented an action plan against tax and financial crime, consisting of 26 measures. This plan introduces new rules on customs, money laundering prevention, tax criminal law, and data access by tax authorities. It specifically targets areas such as undeclared work, corporate sanctions, operational audits, value-added tax (VAT) fraud, and crypto assets. Significant changes include harsher penalties, with organized tax crime punishable by up to 15 years' imprisonment and serious tax evasion reintroduced as a criminal offense carrying a minimum one-year prison sentence.

The action plan was developed collaboratively by the BMF and BMJV to strengthen efforts against various forms of tax and financial criminality. It encompasses a broad spectrum of issues, building on existing frameworks to enhance enforcement and deterrence. Key focus areas include combating money laundering and expanding the scope of tax criminal law to address emerging challenges like crypto assets, which are increasingly relevant in financial crime contexts.

Among the measures, the plan emphasizes improvements in operational audits and corporate sanctions to tackle undeclared work and VAT fraud more effectively. It also provides for expanded data access for the financial administration, enabling better monitoring and investigation of suspicious activities. These provisions aim to close regulatory gaps and improve coordination between authorities.

The introduction of severe penalties for organized tax crime and serious tax evasion marks a notable escalation in punitive measures. Organized tax crime will now be eligible for up to 15 years of imprisonment, while particularly grave cases of tax evasion will require a minimum one-year custodial sentence, classifying them explicitly as crimes under German law.