Liechtenstein bank owes tax dodger damages, court rules

A German tax dodger has won millions in damages in a suit against his Liechtenstein bank for failing to reveal that his information was stolen along with hundreds of other account holders and sold to Berlin for a criminal investigation.

Liechtenstein bank owes tax dodger damages, court rules
Photo: DPA

The case against LGT Treuhand, a former subsidiary of the LGT Group, was decided in January, according to a report in daily Süddeutsche Zeitung on Monday.

The Bad Homberg real estate developer, who was exposed for tax evasion when a bank employee sold the data to the German intelligence service for €4.5 million two years ago, has been awarded €7.3 million by the Vaduz district court.

The tax fraud scandal that followed the sale of the data pointed to some of Germany’s top earners, among them former Deutsche Post boss Klaus Zumwinkel, who was convicted to two years probation and a hefty fine in January 2009. According to the paper, state prosecutors are still investigating up to half of the 845 cases involved.

The Liechtenstein court case has been closely watched by numerous other Germans who are also planning to sue the bank, the paper said.

They argue that if the bank had informed them that their data had been sold, they could have turned themselves in, receiving temporary amnesty and much lower fines.

The bank subsidiary’s successor Fiduco Treuhand AG plans to appeal the case, the paper said.

Meanwhile a newly uncovered tax evasion scandal reached a new dimension last week, as German officials said more stolen data detailing up to 1,500 tax dodgers with funds stashed in Swiss accounts could mean some €400 million in unpaid taxes for state coffers.

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EXPLAINED: The German tax changes coming into effect in April 2023

April 1st will see many of the recent changes to Germany’s tax regime implemented. Although passed through the Bundestag last year and technically effective as of January 1st, April is the first month many of the changes will be evident on employee payslips. We explain what might look different.

EXPLAINED: The German tax changes coming into effect in April 2023

Employees working in Germany should finally see some changes on their payslips in a month from now, as tax law amendments passed last year finally leave some extra money in their bank accounts at the end of each month.

The most important changes concern tax credits or allowances—and many don’t have to be applied for.

Employees will generally see the new allowances automatically calculated into their monthly payslips.

Freelancers will have to use these new numbers when filing their 2023 tax returns after the end of the year. Here are the most important changes:

Basic tax-free allowance increases

The Grundfreibetrag – or “basic allowance” – is the amount of money you get to make a year before being subject to any German tax. In 2022, the first €9,984 a person made in Germany was subject to no tax at all, with any money made on top of that being taxable. As of April 2023, that number is increasing by quite a bit, to €10,908 annually. Employees should see this extra money prorated by month starting with their April 2023 payslip.

READ ALSO: EXPLAINED: How to understand your German payslip

Higher income threshold before entering top tax rates

Before April 1st, earning €58,597 annually put you into the highest possible income tax bracket in Germany. Any earnings above this were subject to the top tax rate of 42 percent.

As of April 1st, the amount someone has to earn before paying the top tax rate of 42 percent goes up by several thousand euros to €62,810 per year, meaning a little bit extra stays in the accounts for anyone earning less than this. There is still a special tax bracket above this for wealthy people. That threshold starts at earnings of €277,826 annually and will remain the same, with people making at least this amount subject to a top tax rate of 45 percent.

READ ALSO: Reader question: How do I find a German tax advisor?

Employee lump sum tax credit to go up

Although freelancers can deduct almost anything associated with their work on their annual tax returns—from stationary to computer and phone purchases—German tax offices also generally assume that employees have certain expenses related to their work that they may pay out of their own pockets.

These could be phones or LinkedIn subscriptions for example. Crucially, the tax office simply gives an amount to each employee in tax credits—without them having to prove the expense through receipts.

The tax office is now hiking this allowance to  €1,230 per year as of April 1st, and this should be reflected on the April 2023 payslips for employees.

READ ALSO: EXPLAINED: Which German benefits are increasing in 2023 – and how do I claim them?

Tax allowance for single parents to go up

Single parents specifically will have an additional tax-free allowance they get to keep, now set to go up with the April payslip to €4,260 annually, assuming they have one child. If they have more than one child, their allowance will increase by another €240 per year, per child—on top of the base amount.

READ ALSO: What benefits are you entitled to if you have children in Germany?