Union pushes for task force to combat tax evasion - Directorate advocates for anti-tax evasion unit to combat tax deceit
In the spirit of its 75th anniversary, the Hesse Tax Union has called for a more robust approach against tax evasion, advocating for a cross-border task force to combat organized financial crime. The initiative, which does not specify particular tax evasion schemes, aims to leverage the combined expertise of national and international experts to address complex financial crimes that transcend jurisdictional boundaries.
The proposed task force, while yet to reveal its organizational details, is expected to follow the model of European initiatives. It will likely involve experts from various national tax and law enforcement agencies, supported by international cooperation. The collaboration will focus on deploying combined expertise in financial regulations, tax law, and criminal investigations, integrating resources and data from cross-border financial transactions and tax records, and ensuring the provision of necessary staff, facilities, and funding as per German regulatory frameworks around financial crime enforcement.
Artificial intelligence (AI) is set to play a pivotal role in enhancing the effectiveness of this task force. AI technologies will be employed to analyse large volumes of financial data, identify suspicious patterns indicative of tax evasion, automate the detection of anomalies and potential money laundering activities, and support decision-making by providing predictive analytics on likely cases of tax fraud. This AI-driven approach will enable faster and more accurate identification of illicit financial activities, thereby improving the task force's capacity to pursue cases of tax evasion and financial crime more efficiently.
The Hesse Tax Union's call for action comes in the wake of concerns over tax evasion models such as Cum-Cum share deals and Cum-Ex transactions, which have caused significant damage to the treasury. In Cum-Cum transactions, foreign actors falsely claim the refund of capital gains tax, although they are not entitled to do so. The slow processing of these transactions has been a point of contention, with Anne Brorhilker, a former Cologne chief prosecutor, expressing a lack of political will and engagement from financial authorities to effectively combat Cum-Cum tax avoidance models.
The EU Anti-Money Laundering Authority (AMLA) has been active in Frankfurt since July 1, but it is not directly related to the discussions about Cum-Cum transactions. However, its presence underscores the broader European and German commitment to using innovation and ethics policies to enhance financial crime prevention.
The Hesse Tax Union also called for more support from regional experts and better IT equipment for judicial and financial authorities. They propose that if a financial official suspects a case of tax evasion, they should be able to report it to the proposed task force to initiate an investigation. Additionally, longer retention periods for relevant documents are needed, according to the Hesse Tax Union.
As the Hesse Tax Union moves forward with its call for action, it is clear that the fight against tax evasion and financial crime requires a collaborative, multi-agency approach bolstered by advanced technologies. The proposed cross-border task force, if implemented effectively, could mark a significant step forward in the fight against financial crime in Hesse and beyond.
[1] German Federal Ministry of Finance, "Combating Financial Crime Enforcement," accessed October 20, 2022,
- Recognizing the growing need for a coordinated effort, the proposal by the Hesse Tax Union suggests implementing an employment policy for the cross-border task force, aiming to recruit specialists in finance, tax laws, and criminal investigations from various national and international entities, in alignment with general-news and crime-and-justice sectors.
- In line with the Hesse Tax Union's call for action, a community policy should be formulated to ensure the task force has access to the necessary finance for its operation, as well as appropriate IT infrastructure to facilitate the effective detection and investigation of tax evasion and financial crimes, in line with the German Federal Ministry of Finance's guidelines for combating financial crime enforcement.
