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How to avoid tax scams in Germany: Here’s what everyone should know

Avoid problems with tax office. Work in Germany. During inflation, those who can earn extra income feel relieved. Instead of discarding old items, consider selling them. You might also sublet a room occasionally or take on a side job. However, it’s important to ensure that all income-generating activities are legal. The tax authorities have increased sophisticated methods to detect unreported income and tax evasion. It is crucial to be transparent and compliant with tax laws to avoid getting caught up in scams.

How to avoid problems with tax office

Starting in 2023, a new law in Germany requires all online platform providers to report transaction data to the tax office. If you conduct at least 30 transactions or earn over €2,000 in income on such a platform within a year, this information will be automatically reported. The tax office can then verify whether you have accurately reported this income on your tax return. Failing to do so may lead to inquiries from the tax authorities, so it’s important to comply with these reporting requirements to avoid potential issues.
Read also: Get the most out of your tax return with these 5 expert tricks

How does the office find out about tax fraudsters?

Even for transactions before January 1, 2023, you are not necessarily safe. The tax office in Hamburg challenged a decision involving the online platform Airbnb, requiring it to submit income data from past periods. In certain situations, rental income that was not reported may be subject to taxation for up to ten years ago. For property owners outside Hamburg, relevant data has been forwarded to the respective federal states for further review.

Similar retrospective assessments occur on eBay, as demonstrated by a 2022 ruling from the Federal Tax Court. The focus is on determining whether a high volume of sales constitutes business activity. However, only cases involving significant sales volumes and turnover are considered business activities, specifically those with annual sales exceeding €17,500 and an average of over 600 transactions per year, according to the Federal Tax Court’s decision.
Read also: Important deadlines for your 2023 tax return in Germany

Anonymous reports to the tax office

Anyone can provide information to the tax office anonymously regarding potential tax evasion. This option has been available in all federal states for years, allowing individuals to report suspected tax fraud through phone calls, emails, or letters without revealing their identity.