What is tax evasion? Section 370 AO explained simply
Under Section 370(1) of the German Fiscal Code (AO), tax evasion (Steuerhinterziehung) is committed by anyone who provides the tax authorities with incorrect or incomplete information about facts relevant for tax purposes, or who, in breach of a duty, leaves them unaware of such facts, and thereby understates taxes or obtains unjustified tax advantages. The offence requires intent; the law sets no minimum amount. The penalty range extends to five years’ imprisonment, and in particularly serious cases to ten.
Legal position as of: 9 September 2026
Section 370 AO: the statutory offence
The provision is found in the German Fiscal Code (Abgabenordnung, AO), not in the German Criminal Code (StGB), and reads:
“Whoever 1. provides the tax authorities or other authorities with incorrect or incomplete information about facts relevant for tax purposes, 2. in breach of a duty, leaves the tax authorities unaware of facts relevant for tax purposes, or 3. in breach of a duty, fails to use tax stamps or tax stamp impressions, and thereby understates taxes or obtains unjustified tax advantages for himself or for another person, shall be punished with imprisonment of up to five years or a criminal fine.”
Section 370(1) AO (unofficial translation)
The offence has three building blocks. First, an act: actively providing false information (number 1) or remaining silent in breach of a duty (number 2). The second variant is the more important one in practice, because it covers the most common case — the tax return that was never filed. It does, however, presuppose a duty: where there is no obligation to file a return, none can be breached.
Second, a result: taxes must have been understated or tax advantages obtained. A tax is understated if it is not assessed, not assessed in full or not assessed on time — even a merely late assessment is sufficient.
Third, intent. Without it, only Section 378 AO remains. The intent must cover all elements: both that the information is incorrect and that an understatement of tax results from it.
Tax evasion in the StGB or in the AO?
Anyone searching for “tax evasion StGB” will not find the provision there. Tax evasion is governed by Section 370 of the German Fiscal Code, not by the Criminal Code. This is no coincidence: in addition to procedural law, the Fiscal Code also contains tax criminal law, because the two are closely intertwined.
The Criminal Code nevertheless remains relevant. The General Part of the StGB also applies here — for example to intent, attempt, perpetration and aiding and abetting. And the limitation provision in Section 78 StGB supplies the basic period for criminal prosecution, which Section 376 AO then extends for particularly serious cases.
In practice this means: tax criminal law is criminal law with its own core provision and its own procedure. How that procedure works is explained on our overview page on tax criminal law.
Intent, recklessness, oversight
Between “deliberately evaded” and “simply overlooked”, German tax law recognises three levels, each with different consequences. Which level applies is often the real point of dispute in proceedings — and it cannot be read from the amount.
Intent
The person acting knows that their information is incorrect and at least accepts the understatement of tax. Consequence: criminal offence under Section 370 AO.
Recklessness
Gross lack of care — it should have been obvious. Consequence: administrative offence (Ordnungswidrigkeit) under Section 378 AO, administrative fine (Geldbuße).
Simple oversight
A mistake that even a careful taxpayer can make. Consequence: a duty to correct, but neither a penalty nor an administrative fine.
Reckless understatement of tax under Section 378 AO
Section 378 AO covers the same result as Section 370 AO, but requires recklessness rather than intent. It is an administrative offence punished with an administrative fine — no entry in the Federal Central Criminal Register (Bundeszentralregister), no imprisonment.
The classification also has consequences outside criminal law: the assessment period (Festsetzungsfrist) under tax law is five years for reckless understatement of tax and ten years for tax evasion. How the two periods interact is explained on our page on the limitation period for tax evasion.
Typical cases in practice
The four constellations we encounter most often have one thing in common: in most cases, what was missing was not the will to be honest about taxes, but the awareness that a taxable event had occurred at all.
Undeclared crypto gains
The most common case in our practice. A widespread assumption is that only the payout in euros is relevant for tax purposes — in fact, exchanging one cryptocurrency for another is also a disposal. How an amended declaration (Nacherklärung) works in this situation is explained under crypto voluntary disclosure.
Income from platforms and collaborations
Affiliate income, paid collaborations and benefits in kind are often not perceived as business income. In addition, VAT is regularly affected as well as income tax. More on this under tax advice for influencers.
Unreported inheritances and gifts
Acquisitions upon death and gifts are subject to their own notification obligations with short deadlines. They are often overlooked because the acquisition itself is perceived as a private matter. Details in our article on the notification obligation for inheritances and gifts (in German).
Accounts and income abroad
Anyone with unlimited tax liability in Germany is taxed on their worldwide income. Foreign investment income and rental income belong in the German tax return, even if they have already been taxed in the source country. What needs to be considered is explained under international tax law.
Aiding and abetting tax evasion
Aiding and abetting (Beihilfe) is committed by anyone who intentionally assists another person in that person’s intentionally committed tax evasion. The relevant provision is in the General Part of the Criminal Code and, through it, also applies in tax criminal law.
The decisive factor is double intent: the helper must want to provide the assistance and know that the offence being supported is tax evasion. Anyone who contributes unknowingly is not aiding and abetting.
For professional activities, that is the whole point. Bookkeeping, advice, account management, processing payments — these are all acts typical of a profession which do not in themselves constitute aiding and abetting, even if they objectively benefit an offence. The position is different if the helper knows of the principal offence and directs their conduct towards it.
In practice, the question mainly affects family members, accounting staff and business partners. Anyone who fears they may have ended up in such a role should have their own position reviewed separately from that of the principal offender — their interests may diverge.
Particularly serious cases
Section 370(3) AO increases the penalty range to imprisonment from six months to ten years and lists six statutory examples (Regelbeispiele); where one of them applies, a particularly serious case is generally to be assumed:
- Understating taxes or obtaining tax advantages on a large scale (in großem Ausmaß)
- Abuse of powers or of one’s position as a public official
- Exploiting the assistance of a public official who abuses their powers
- Continued understatement of tax using counterfeit or falsified documents
- Understating VAT or excise duties as a member of a gang
- Using a company in a third country to conceal facts relevant for tax purposes
On “a large scale”: the law names this statutory example without setting an amount. Where the threshold lies in an individual case is a matter for case law and the specific circumstances — and precisely the point at which an assessment becomes necessary. We deliberately give no figure and no order of magnitude here: the amounts circulating online are not statutory rules, they have changed several times, and a figure on this page would suggest a precision that does not exist.
Classification as a particularly serious case has two further consequences: the limitation period for criminal prosecution is extended to fifteen years (Section 376(1) AO), and the statutory examples in numbers 2 to 6 bar a voluntary disclosure (Selbstanzeige) under Section 371 AO.
What to do now
If, while reading this page, you suspect that you yourself may be affected, you should keep two things apart: time pressure and haste. There is time pressure because exclusion grounds (Sperrgründe) can arise. Haste is harmful because an incomplete voluntary disclosure costs the exemption from punishment in full.
- Do not submit anything before the facts have been fully worked through.
- Secure your documents while they are still available — bank statements, annual investment income statements, transaction histories.
- Have it checked whether the route of a voluntary disclosure to the tax office is still open.
- In the event of a search, or once the initiation of proceedings has already been notified, make no statements on the matter until the situation has been clarified.
Which penalty range may apply and which factors determine sentencing is explained on our page on penalties for tax evasion.
Frequently asked questions about tax evasion
The questions we are asked most often about Section 370 AO.
From what amount is tax evasion a criminal offence?
The law sets no minimum amount. Section 370(1) AO turns on whether taxes are understated or unjustified tax advantages are obtained through incorrect, incomplete or unlawfully omitted information — regardless of the amount. The amount only matters at the next level: in sentencing, for the statutory example of a particularly serious case and for the question of whether a voluntary disclosure (Selbstanzeige) can still lead to exemption from punishment.
What is the difference between tax evasion and understatement of tax?
Understatement of tax (Steuerverkürzung) is the result; tax evasion is the criminal offence committed with intent. Section 370 AO requires intent. Anyone who brings about the same result recklessly does not commit a criminal offence but the administrative offence (Ordnungswidrigkeit) of reckless understatement of tax (leichtfertige Steuerverkürzung) under Section 378 AO, which is punished with an administrative fine (Geldbuße). The difference therefore lies not in the result but in the state of mind of the person acting.
Is tax evasion punishable without intent?
No. Without intent there is no tax evasion under Section 370 AO. What may then apply is reckless understatement of tax under Section 378 AO — an administrative offence, not a criminal offence. A simple oversight without recklessness gives rise to a duty to correct, but neither to a penalty nor to an administrative fine. In the individual case, drawing this line is often the real point of dispute.
What counts as aiding and abetting tax evasion?
Aiding and abetting (Beihilfe) is committed by anyone who intentionally assists another person in that person’s intentional tax evasion. Both must be intentional: the assistance itself and the knowledge that the offence being supported is tax evasion. Acts typical of a profession — bookkeeping, advice, account management — do not in themselves amount to aiding and abetting; what matters is whether the helper knew of the principal offence and wanted to further it.
When does tax evasion become time-barred?
Under criminal law, the basic offence becomes time-barred after five years (Section 78(3) no. 4 of the German Criminal Code (StGB) in conjunction with Section 370(1) AO), and in the particularly serious cases of Section 370(3) sentence 2 nos. 1 to 6 AO after fifteen years (Section 376(1) AO). This must be distinguished from the assessment period (Festsetzungsfrist) under tax law, which is ten years in cases of tax evasion. The details are on our page on the limitation period for tax evasion.
What penalty applies to tax evasion?
The basic offence under Section 370(1) AO carries imprisonment of up to five years or a criminal fine. In particularly serious cases, the penalty range under Section 370(3) AO is imprisonment from six months to ten years. In addition, the tax must be paid back together with interest on evaded taxes (Hinterziehungszinsen) under Section 235 AO. The details are on our page on penalties for tax evasion.
About the author
Maximilian Klein — Tax Advisor (Steuerberater) & Founder
Tax advisor (Steuerberater) focusing on amended declarations and tax criminal matters.
Note: This page reflects the legal position as of 9 September 2026 and does not constitute advice on your individual case. Whether a matter is to be classified as intentional, reckless or a simple oversight depends on the specific circumstances and requires them to be reviewed.
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