1    Background

The German Federal Court of Justice (BGH) has, once again, had to rule on the criminal treatment of incorrect monthly/quarterly VAT returns and a subsequent incorrect annual VAT return. To date, it has been accepted that both types of returns could constitute a single procedural act. However, the Federal Court of Justice’s ruling of 10 December 2025 (1 StR 387/25) marks a turning point: the Senate has now expressly abandoned its previous jurisprudence. The decision has considerable significance for VAT reporting practice and the submission of corrections.

2    Facts

The defendant acted as the de facto managing director of a German limited liability company (GmbH) that originally sold luxury furniture. Due to economic difficulties, he decided, in early 2014, to participate in VAT carousel fraud involving the sale of televisions. The defendant decided not to file any monthly/quarterly VAT returns at first in order to conceal the sharply increased turnover. The monthly/quarterly VAT returns for the months of April to July 2014 were finally filed on 12 October 2014 by an accountant acting in good faith. The monthly/quarterly VAT returns for August and September 2014 were filed in November 2014 and February 2015, respectively, by a tax consultant acting in good faith. In the monthly/quarterly VAT returns, the defendant claimed input VAT from incoming invoices, even though he knew that the suppliers were not meeting their tax obligations. In total, he wrongfully claimed input VAT in the amount of approx. EUR 937,000. A late annual VAT return for 2014, submitted in June 2016, showed the same incorrect input VAT amounts. The regional court limited the proceedings, in accordance with sec. 154a para. 2 of the Code of Criminal Procedure, to the monthly/quarterly VAT returns for April to September 2014 and excluded the incorrect annual VAT return from prosecution.

3    Decision

The BGH assumes both a uniform instruction for the monthly/quarterly VAT returns for April to July 2014 and a concurrence of acts (Tateinheit). For the months of August and September 2014, it remains a case of several separate acts (Tatmehrheit). Central to this is the abandonment of the previous jurisprudence on the concept of the “procedural act”: monthly/quarterly VAT returns and annual VAT returns for a given year are no longer to be regarded as a single procedural act. The BGH justifies this by the absence of a tax law interconnection. Monthly/quarterly VAT returns and annual VAT returns are independent tax returns with separate assessment procedures. Therefore, the wrongful and culpable elements can be evaluated independently.

The BGH emphasises that the assumption of multiple procedural acts does not lead to inadmissible multiple punishment. Incorrect monthly/quarterly VAT returns regularly constitute concurrently co-punished offences of a subsequent incorrect annual VAT return and are therefore generally not judged independently. An additional conviction for the monthly/quarterly VAT return would only be considered if the annual VAT return could not be judged for legal reasons, for example due to the statute of limitations or the discontinuation of proceedings with regard to the annual VAT return. In cases of identical wrongful acts, therefore, only one penalty will continue to be imposed. Furthermore, the BGH clarifies that the submission of an accurate annual VAT return can constitute a (partial) voluntary disclosure with regard to the monthly/quarterly VAT returns.

4    Consequences for the practice

The BGH’s decision means that businesses must now consider each individual VAT return as an independent act in terms of criminal law. This significantly increases the demands on internal organisation. The monthly or quarterly reporting obligations are becoming more important from a criminal law perspevtive because errors are no longer subsumed within the framework of a single procedural act but can be pursued individually. The widespread practice of making amendments to correct errors that become apparent later in the annual VAT return or making them collectively in the monthly VAT return for December is not recommended. Instead, each incorrect monthly/quarterly VAT return should be amended immediately.

Businesses must therefore clearly structure, document and control their declaration processes. The chains of responsibility between management, internal accounting and the tax department must be clearly defined. Finally, the distinction between a single instruction and several separate instructions is becoming increasingly important. Businesses must structure their internal workflows in such a way that it is clear whether a consolidated instruction has been issued for different periods or whether a separate instruction has been issued for each VAT return filing period. In future, this distinction may be decisive in determining whether several acts constitute a concurrence of acts or several separate acts. Therefore, a precise process description and careful documentation of internal procedures, within the framework of a tax compliance management system and procedural documentation, are essential prerequisites for being able to conclusively present the actual course of events in the case of a criminal tax audit.

As the BGH significantly restricts the possibility of the annual VAT return “subsuming” the monthly/quarterly VAT returns, the pressure to check ongoing periods will increase. Incorrect or late monthly/quarterly VAT returns may, in future, be sanctioned independently even if an incorrect annual VAT return is subsequently filed. Even minor errors in individual monthly/quarterly VAT returns can therefore lead to cumulative criminal-law risk. Companies should align their internal control systems to ensure the timely and complete recording of relevant transactions and continuously review the plausibility of the amounts to be reported. Automated checks using digital tools can be helpful in this regard.