Social security fraud

Tax evasion (such as payroll tax evasion in this case) is committed by the § 370 Tax Code regulated. More precisely, it states:

§ 370 AO - Tax evasion

(1) A penalty of imprisonment for up to five years or a fine shall be imposed on anyone who

1. provides incorrect or incomplete information to the tax authorities or other authorities about tax-relevant facts,
2. fails to inform the tax authorities about tax-relevant facts in breach of duty, or
3. fails to use tax stamps or tax stamps in breach of duty

and thereby evades taxes or obtains unjustified tax advantages for himself or another.

(2) The attempt is punishable. [...]

It should be noted here that in the case of undeclared work or social security fraud and tax evasion, these are two individual or separate acts, which must be assessed separately from each other. Such cases are particularly difficult because a large number of authorities are involved. Among others, the following should be mentioned here: the tax office, the police authority with the investigating public prosecutor's office, the customs authority, the FKS (Financial Control of Clandestine Employment) or also the pension insurance as well as health insurance and employment agency.

Tax evasion already exists if the employer does not declare the wage tax completely or in time to the tax office. According to the § 370 AO it is therefore irrelevant whether the employer pays the payment in full or in full after the 10th day of the registration period. Meanwhile, in the context of penalty assessment, the employee's black wage paid is extrapolated to a gross wage. In the context of a partial black wage payment, the extrapolation is then extrapolated to the part of the black wage in the same way as in the case of full black wage payment. 

Since the employer must have received the employee's tax data in the context of the non-partial black payment, the partial black payment is also calculated in the same way as the non-partial black payment. This means that if the employee is placed in tax class III, the tax will be recalculated on the basis of tax class III. This is done to protect the employee. If the tax data of the undeclared workers are not available, the recalculation of the tax will take place on the basis of tax class VI. This is the highest taxation that currently exists in Germany for employees.

With regard to marginally employed persons, a different way of assessing damages takes place. As a rule, the employer has to pay a lump-sum amount of income tax and social security contributions when employing a person who is marginally employed. However, there is no calculation in the above-mentioned way. The damage is therefore the lump sum amount that has not been paid.