Liability and criminal tax proceedings against managing directors, straw man managing directors and factual managing directors of a GmbH

Deutsche Version

Again and again, we have to defend cases in which the question has to be clarified who is responsible under tax and criminal tax law for tax evasion acts committed by a GmbH. This question becomes particularly important if the GmbH is no longer in a position to pay the evaded taxes through its own assets or if it has perhaps already filed for insolvency against the assets of the company.

In such cases, the tax office consistently examines the responsibility of the managing director to be liable for taxes of the GmbH with his personal assets.
The legal basis required for this can be found in § 69 AO (German Tax Code) in conjunction with §§ 34 and 35 AO, according to which persons entitled to dispose of and legal representatives of natural and legal persons are liable for all claims arising from tax obligations, i.e. for taxes and ancillary benefits, in the event of intentional and grossly negligent breach of the obligations imposed on them. The prerequisite for this is that the culpable breach of duty does not result in the timely determination or fulfilment of taxes or that tax refunds are refunded without any legal reason.
Who omits it thus as managing directors of a GmbH e.g. to deliver the current value added tax advance announcements of a GmbH in time under consideration of the periods set for it by law because of that and by being to blame for the fact that the value added tax debt is not determined in time, clings with his personal fortune with uncollectability of the tax debt.

The proof of intentional or grossly negligent breach of duty is incumbent on the tax authorities, whereby they frequently only assume that a managing director must be aware of the tax obligations and deadlines for submitting advance VAT returns and if he does not comply with these, he has at least accepted the untimely tax assessment with approval, i.e. acted intentionally.

If such a statement remains undisputed, it is highly probable that the criminal authorities will simply accept it and also impose criminal liability on the managing director.

This responsibility falls to the managing director, who actually conducts the day-to-day business of the GmbH, as well as to the purely formal managing director, who is only formally appointed managing director of the GmbH and is entered in the commercial register as a so-called “ straw man“, while another person – the de facto managing director – actually conducts the business of the GmbH without being appointed managing director.
A frequent example of this is, for example, the close relative (spouse, parents) who is asked by a relative (spouse, son/daughter) to hold the position of managing director in the GmbH for formal reasons, since the actual managing director is not in a position to be entered in the commercial register and to act as managing director of the GmbH due to the conviction, for example, of an accusation of a punishable delay in insolvency or another catalogue act of § 6 GmbHG.
If you do your close relative this favor, you must know that you assume all liability risks for the fact that the tax obligations of the GmbH are not fulfilled. A straw man managing director is also responsible towards the tax authorities for ensuring that the GmbH complies with its tax obligations.

The fact that the de facto managing director is also liable for the tax debts of the GmbH in accordance with §§ 69 and 34 AO (German Tax Code) may only provide little reassurance, since he has not acted or has acted late as the de facto person authorised to dispose of the GmbH – or in the case of the late submission of tax returns.
This joint liability with the de facto managing director is not very reassuring, namely whenever the de facto managing director is also not in a position to repay the tax debts of the GmbH, since the tax authorities may choose between several liability debtors without making any discretionary errors. In this case it will surely decide to prosecute the straw man managing director as perhaps only remaining solvent liability debtor.

From a criminal law point of view, such circumstances can be taken into account in favour of the straw man managing director in order to mitigate the punishment. However, as a rule, these circumstances do not lead to the exclusion of criminal liability on the part of the straw man managing director.
We therefore recommend to each managing director of a GmbH to supervise the adherence to the tax obligations in own person and to let themselves be confirmed regarding current delivery periods at best by the tax consultant mandated for this the assumption and adherence to the tax delivery periods.