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 co- operation obligations, the privacy of their information must be ensured. This is ensured by the General Data Protection Regulation (GDPR) and tax secrecy provi- sions (§§ 30 et seq. German Tax Code (AO). The provisions of the §§ 30 et seq. AO 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. Since the tax payments made by the companies were reconciled as part of the EITI process for the first and the second D-EITI report, a power of attorney granted by the taxpayer to the Independent Administrator (IA) was necessary to retrieve relevant tax data. For this year’s reporting, the D-EITI is testing an alternative model permissible under the EITI Standard to ensure the quality of the payments disclosed by the reporting companies (see Quality assurance). Under this model, the exemption from tax secrecy is unnecessary.