Big accounts, small consequences

Tax evasion returned to the front pages in Germany this week, first with the high-profile case of the feminist Alice Schwarzer, and then with an embarrassing instance for the Social Democrats - who want tougher tax laws - in Berlin.

Andre Schmitz (pictured), Berlin's cultural secretary, submitted a letter asking to be removed from his post on Tuesday, albeit avoiding the German word for "resignation" (Rücktritt) throughout the text.

"I am taking this personally painful step in order to avoid causing harm to my office and to cultural politics in Berlin," Schmitz said.

Amnesty law back in question

Financial investigators discovered in 2012 that Schmitz had a Swiss bank account into which he had placed a roughly 425,000-euro ($575,000 at today's rate) inheritance without subsequently paying taxes on the interest. Social Democrat party chairman Sigmar Gabriel responded angrily at a party function late Monday, reminding his colleagues that politicians had a duty to act as role models.

"We have clearly said that we are in favor of pursuing, and prosecuting, tax evasion with more vigor," Gabriel said. "This is not a trivial offense."

Schmitz was too late to take advantage of a German law - one that Schmitz's Social Democrat party would like to scrap - allowing tax dodgers to correct their own mistake and pay back-taxes, plus interest, and receive immunity from prosecution in return. However, people can only take advantage of this law prior to public prosecutors' identifying an irregularity. Instead, Schmitz struck a deal to pay 20,000 euros in back-taxes and interest - plus an extra 5,000 euros for any assets accrued so long ago that the statute of limitations had passed. In return, prosecutors dropped the charges against the politician.

News that Berlin's Social Democrat mayor, Klaus Wowereit, was informed of the case in 2012 and chose not to act shifted some of the pressure onto the capital's top politician, who is currently on holiday skiing.

Schwarzer's large account - and its small consequences

As reports of Schmitz's wrongdoing first surfaced on Monday, it was the leading German feminist Alice Schwarzer whose own tax troubles covered the domestic front pages. On Sunday, Schwarzer acknowledged on her website that she had held a Swiss account "since the 1980s," saying that she had voluntarily settled the case by paying some 200,000 euros in back-taxes and interest.

Schwarzer's confession had followed a report revealing the issue in Spiegel, and the writer used the majority of her personal entry to attack the leading German publication for "character assassinaton." Schwarzer said that, as well as the right to immunity to prosecution, Spiegel should have honored her right to privacy.

"There are mistakes you can't fix. Character assassination, for example. Not filing your taxes properly however, as in my case, is one that can be fixed ... and that's exactly what I did," Schwarzer wrote.

Schwarzer, like Bayern Munich club president Uli Hoeness last year, submitted a personal tax correction to the authorities. Unlike in the Hoeness case, however, public prosecutors appear to have been satisfied by her amended returns. The Bayern Munich mainstay faces a trial in Munich later this year, as prosecutors allege that he still owes back-taxes.

While in opposition, the Social Democrats rejected a German-Swiss deal to combat tax evasion, saying it did not go far enough. During this domestic debate, Hoeness' high-profile case, and the publication of the Offshore Leaks report on global tax avoidance, the number of Germans taking advantage of this immunity law tripled in 2013.

Schwarzer's EMMA magazine said on Monday that its publisher had donated 1 million euros to a new foundation promoting equal opportunities, acknowledging in its story that Schwarzer had decided to bring the announcement forward because of "the current debate."

msh/mkg (dpa, Reuters)