Black money: detection intensified

Black money is a colloquial term for taxable but not taxed income, usually obtained from a profession or business through undeclared work. And for the record, inherited black money remains black money

Investigation of black money intensified

Especially in organized crime, significant amounts of black money are generated through criminal illegal activities. The liquid assets created through tax evasion can initially only be kept in a safe at home or at the bank and, just as when received, will have to be spent in cash again without supporting documents to avoid criminal prosecution.

Bank account in Switzerland or Luxembourg

In the past, for larger amounts, the money was often deposited in a foreign bank, usually a Swiss or Luxembourg bank account with a number (not in name). But countless wealthy people will sleep a little less peacefully these days because the hunt for black money has intensified. For example, tax investigation services from several countries exchange CDs with each other containing the personal details of bank account holders in Switzerland. The inspector can use that information to unmask suspected tax evaders. There is also an increasing number of tax treaties with foreign inspections.

Money laundering

In order to be able to legally use large sums of criminal black money, in other words to channel it back into the legal money circuit, that money must be laundered. This means that the origin of the money must be obscured through sham transactions and manipulated investment transactions across national borders.

Is reducing tax burden an option?

To reduce the volume of black money, at least to the extent that it comes from legal activities, economists recommend reducing the tax burden. Non-criminal tax evaders should be encouraged to pay taxes in this way.

Switzerland is no longer safe from black money

In 2010, the German tax authorities managed to seize two CDs from Switzerland containing the privacy-sensitive information of undeclared savers, initially customers of Credit Suisse, and a few weeks later also of UBS bank. To the extent that said customer data related to other EU partners, the data was passed on to the ministries in those countries. Switzerland is therefore no longer safe for owners of black money.

Far East new haven for tax evaders

The consequences of that approach are becoming increasingly clear. Dutch citizens are becoming increasingly transparent. It is becoming more difficult to hide amounts of money from the tax authorities in Europe. That explains why Asian countries, especially big cities like Singapore and Hong Kong, have a certain appeal in this regard. But how do you get your money to Asia unnoticed? The impression is therefore that certain countries in the Far East are benefiting from the development. But some people doubt whether places like Hong Kong and Singapore actually provide safe havens for dirty money. These states have also been the focus of the tax investigation services for some time and it is only a matter of time before these countries also provide relevant information.

Tax evasion is not just a problem for the rich

In the eyes of many, tax evasion is mainly seen as a crime committed by prominent figures. But the practice of many inspections looks very different. Investigative officers certainly do not overlook the common man in their tax audits, on the contrary. And what many do not suspect: small tax evaders will be punished as severely as millionaires, even if the amount involved is only a few thousand euros. Many tax evaders wonder what the sanction will be in the unlikely event, especially in the case of alleged trivialities. The ignorance is great: Am I going to jail now? Or will I get a fine?”

Common forms of tax evasion

The tricks of small-time fraudsters are well known to investigating officers:

  • the most popular method is the concealment of income: undeclared work, “black money” in a restaurant or investing dirty money abroad;
  • but sham transactions are also very popular. This includes, for example, rental contracts concluded with family members solely for appearance’s sake;
  • and the declaration of private expenses as business costs is also widely used. For example, the Porsche used privately by the lady is only too happy to be presented as business-related.