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Tax secrecy

How important is tax secrecy in Germany?

Tax secrecy has a high priority in Germany. Since taxpayers must fully disclose their tax details to the financial authorities within the framework of their cooperation obligations, the privacy of their information must be ensured. This is ensured by the Tax Secrecy provisions (§§30 et seq.) of the German Tax Code (AO). The provisions of the Code regulate who must protect tax secrecy and under what conditions the disclosure or utilisation of data (which is subject to tax secrecy) is permitted. Tax secrecy thus serves to protect the taxpayer.

A breach of tax secrecy can only be permitted under very strict conditions. Any disclosure of information which is subject to tax secrecy is normally only permitted if expressly authorised by law, if the person concerned agrees to the disclosure, or if there is a compelling public interest in the tax data in question.

This is why the disclosure of data for voluntary reporting initiatives – like the Extractive Industries Transparency Initiative – requires the explicit consent of the companies concerned. Similarly, the implementation of reconciliation regarding tax payments within the framework of the EITI process requires the permission of the taxpayer in the form of a power of attorney for the Independent Administrator to query the relevant tax data.