Daily Management Review

Volkswagen Employees at the Centre of a Emissions Scandal Related Tax Evasion Investigation


German prosecutors have announced an investigation into whether the Volkswagen emission scandal also constituted tax evasion after a couple of months since the German car maker admitted that it had sold up to 11 million cars worldwide fitted with software designed to produce favorable and flawed emissions tests.
The auto world was stunned after VW admitted to have fitted faulty emission software in 11 million of its cars that included brands like the  AudiA3 (2009-15), VW Jetta (2009-15), VW Beetle (2009-15), VW Golf (2009-15) and VW Passat (2012-15).
The ramifications for the company were substantial and the then Chief Executive Officer (CEO) Martin Winterkorn had to resigned following the revelation taking responsibility for what he called “irregularities.”
While the German auto maker had promised to launch an internal investigation into the scandal, any result of that investigation is yet to be made public.
According to German laws, a company cannot generally be prosecuted for crimes. Under the German Penal Code, known as Strafgesetzbuch, only an individual, but not a company can be held responsible for criminal wrongdoings, explains Axel Weber, a Frankfurt lawyer at Factum Legal. However this rule also comes with an exception - a company can be held liable in cases of minor felonies.
Experts are of the opinion that the tax evasions for a case so huge and the related financial and fraud crimes would be substantial and would therefore be treated as a more major crime. And this is exactly what seems to be happening with the German authorities investigating into the possible tax evasion due to the scandal.
The investigations about tax evasion centers on five Volkswagen employees - those employees have not been publicly identified, confirmed Klaus Ziehe, speaking on behalf of the Staatsanwaltschaft Braunschweig. However it was not confirmed whether those five employees are high level employees or not. German authorities also confirmed that the number of employees said to be involved in the investigation could “become higher or lower” as the investigation continues.
This new investigation is entirely different from the already ongoing investigations into the actual emissions fraud. The later investigation has so far targeted six employees of the company.
The latest investigation hinges around the possible tax losses to the government due Volkswagen. The company managed to secure tax benefits for customers who bought the car by manipulating test results and thus increased sale. Customers in Germany are allowed lower motor vehicle taxes and inspection fees as a part of the tax benefits.
Since 2009, motor vehicle tax calculation in Germany is based on the level of CO2 emissions and the resultant taxes are to be paid annually. Volkswagen ensured that many taxpayers paid less in tax than they should have paid since taxpayers would have reported lower CO2 emissions.
The investigation is most likely not be resolved by year end even though no specific date has not been announced as of yet. Ziehe believes that it would be “some months” at a minimum before the investigation is wrapped up.
( Source:www.forbes.com)