Abuse of criminal law instruments to combat foundations

ptp20221018046 Politics/law, business/economy

Dresden, October 18, 2022 (ptp046/10/18/2022/7:45 p.m.) – The defense alleges the abuse of criminal tax law to combat foundations for fiscal motives

Attorney Franz-Josef Schillo, defending the founder of a foundation, demanded the replacement of the previous public prosecutor against the Saxon Attorney General last week. He also raised written reprimands against the Saxon Ministers of State for Justice, Finance and the Interior. From his point of view, there is an “abuse of criminal law instruments to combat foundations”. At the same time, he filed a criminal complaint on behalf of his client against representatives of the Saxon tax authorities for attempted process fraud.

The fact that the Dresden Higher Regional Court overturned the Dresden Regional Court’s conviction on appeal and the Federal Fiscal Court upheld the non-admission appeal shows, in his opinion, that the “legal situation is not as simple as the public prosecutor’s office and the tax authorities are still suggesting to attempt”.

In addition, from his point of view, the procedures of both the public prosecutor’s office and the financial administration are “borderline”. The founder of the foundation is being prosecuted despite an agreement with the tax audit and despite the fact that he has disclosed the events for many years. The “comprehensive tax presentation is simply ignored throughout, even after the approval of the revision by the Federal Fiscal Court”. All of this represents “an attempt to criminalize a foundation in order to avoid tax savings that are perceived as unwelcome”. Here, “the tax authorities do not even shy away from making false statements to the Federal Fiscal Court”.

background

The founder of the foundation, who is being defended by attorney Franz-Josef Schillo, grew up in the GDR. After German reunification, he supported the establishment and management of a Montessori school for many years. After he had made considerable money from the sale of the consulting firm he had set up after German reunification, he decided to donate half of the assets thus acquired to a foundation for the promotion of educational purposes. For this purpose he founded a corresponding foundation.
Since the generation of income was problematic due to the low interest rate phase at the time, he decided to provide the foundation with substantial funds in the form of a donation. The foundation then granted him a loan for the same amount at an interest rate that was above the normal market interest rate. This procedure was carried out on the advice of a foundation consultant who is particularly experienced in tax matters.
The background to this was that a foundation is only allowed to allocate income to the purpose of the foundation and not to touch the basic stock of the foundation. The procedure therefore ensured that the foundation could permanently have significant funds at its disposal to pursue the foundation’s purpose of promoting education.

course of the criminal proceedings

The public prosecutor’s office in Dresden accused the founder of the foundation of intentional tax evasion. The temporal connection between the donation and the granting of the loan alone led to the exclusion as a donation and to intentional tax evasion. Compliance with a third-party settlement or the good intentions of the donor are irrelevant.
On this basis, both the District Court of Dresden and the District Court of Dresden sentenced the founder of the foundation to a prison sentence of one year and 6 months on probation. In contrast, each of Prof. Dr. Mansdörfer and the lawyer Franz-Josef Schillo filed appeals to the OLG Dresden (Az. 1 OLG 13 Ss 348/21) were successful. The conviction was overturned by decision of April 5, 2022 and the case was referred back to the regional court.

Process flow of the tax procedure

In the tax proceedings, the Leipzig Finance Court shared this view and refused the tax deduction. The complaint against non-admission (Az. IX B 52/21) led by Mr. Rabe in coordination with Mr. Franz-Josef Schillo, was successful.
The BFH approved the revision. This is currently managed (Az. XR 4/22). The main argument is that if a third-party comparison is maintained, the granting of a loan to the donor after the donation is also permissible and does not rule out the deduction of the donation.

The defender

Lawyer Franz-Josef Schillo was a member of the commercial law firm Noerr from 1999 to 2014. Most recently, he was responsible for white collar crime in the Dresden and Frankfurt am Main branches. Since 2014 he has been running a nationwide criminal defense boutique in Dresden in the field of corporate defense as well as white collar crime and criminal tax law. In January 2023 he will open a branch at Am Ludwigsplatz 5 in Saarbrücken (opposite the State Chancellery). Until 2021, he was also Vice President of the Saxony Bar Association, where he was responsible for criminal law issues and for setting up the money laundering check.
He became known, among other things, for the successful defense of Gunther von Hagens, a large baker in the Wallraff case, investors in the so-called Goldfinger case at the Augsburg district court and a former chamberlain before the Ravensburg district court.

For more information regarding this press release, please contact:
Lawyer Franz Josef Schillo
Phone: 0351 4794733-3
Mail: [email protected]
Mobil: 0170 7926520

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