Breaking: German Tax Evasion A Billion Dollar Industry

Posted by Steve Spalding in Featured | View comments

The only constants in life are death and taxes. That is, unless you run a business in Germany.

A rumor recently came to me that turned out to be right on the money. In recent months, Germany has launched a massive investigation into tax fraud that could see indictments for what has described to me as the “top echelon of Germany’s wealthiest businesses.” The total amount of money involved could be in the billions.



Death And Taxes

These businesses have been making use of Lichtenstein, a small country bordering Switzerland, as a tax haven. Like Switzerland, Lichtenstein has laws that give substantial protections to people who bank there. As a result, it is one of the few countries that has more corporations registered than citizens, and has become known as one of Europe’s premiere tax shelters.

Also interesting is how aggressively the German government has been pursuing this matter. They have been heavily criticized for paying $7.3 Million to purchase evidence that was stolen from LGT (a Lichtenstein bank) by a citizen of Lichtenstein. Using tax money in this way could very well be illegal.

The evidence was a DVD containing a list of people purportedly involved in this tax evasion.

Depending on who that list ends up including, this could be a resounding blow to the German business world that would resonate across every sector, including U.S. markets.

The biggest arrest to date has been Deutsche Post head Klaus Zumwinkel, who is accused of evading about $1.5 Million in taxes. Zumwinkel has since resigned from his position.



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This entire fiasco does shine light on the German tax system, which charges the wealthiest tax payers 47% with an additional 3% often levied as a church tax. It will be interesting to see how this pans out as more arrests occur, and how this coup effects German companies here in the U.S.

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