Insights
TAX & BUSINESS
Criminal Tax Liability of a De Facto Managing Director
Anyone who de facto takes over management, orders payments and fulfils or neglects tax obligations is to be qualified as a de facto managing director.
The Federal Fiscal Court (Bundesfinanzgericht, BFG) clarified in a ruling that criminal tax liability does not depend solely on formal appointment as managing director, but also on the actual behaviour of a person. Anyone who in practice runs the business, makes decisions and determines tax‑relevant matters is considered a de facto managing director.
For this person to be held criminally liable, at least conditional intent must be present. This is the case when the perpetrator does not aim to achieve the unlawful result, does not even calculate with the occurrence of the “outcome” with certainty, but nevertheless regards it as possible, i.e. sees it as foreseeable and is prepared to accept such an outcome.
Conclusion
The BFG makes clear with the judgment that the liability of a managing director in criminal tax law is not tied solely to formal registration in the commercial register. Essentially, it is who actually assumed management and made the decisive decisions. Anyone who de facto takes over management, orders payments and fulfils or neglects tax obligations is to be qualified as a de facto managing director. The de facto managing director can be held criminally liable in tax law just as a formally appointed managing director can.
For this person to be held criminally liable, at least conditional intent must be present. This is the case when the perpetrator does not aim to achieve the unlawful result, does not even calculate with the occurrence of the “outcome” with certainty, but nevertheless regards it as possible, i.e. sees it as foreseeable and is prepared to accept such an outcome.
Conclusion
The BFG makes clear with the judgment that the liability of a managing director in criminal tax law is not tied solely to formal registration in the commercial register. Essentially, it is who actually assumed management and made the decisive decisions. Anyone who de facto takes over management, orders payments and fulfils or neglects tax obligations is to be qualified as a de facto managing director. The de facto managing director can be held criminally liable in tax law just as a formally appointed managing director can.