Dawn raid, VAT inspection, Section 25f assessment: the first 72 hours

The first 72 hours do not decide guilt. They decide data, evidence and liquidity. Secure first, sort second, speak third.

Unannounced officials at reception. A search warrant on the table. Or an assessment notice denying input VAT under Section 25f of the German VAT Act. At that moment, almost nothing is legally decided: the presumption of innocence applies, and in the tax proceedings the burden of proving that the company knew or should have known of fraud lies with the tax administration. What is decided in those hours is something else — which data leaves the building, which statements end up on file, which deadlines start running and whether liquidity is protected. There is a plan for exactly this. Companies that know it can stay calm — and calm is the most effective defence resource there is. This page explains the German instruments in plain terms for international management teams, and sets out the 72-hour plan we use.

First question: what is it? An inspection is not a search.

German law knows several measures that look alike at the door but follow entirely different rules.

The VAT inspection — “Umsatzsteuer-Nachschau” (Section 27b UStG) — arrives unannounced but is not a search: officials may enter business premises during business hours, inspect records and ask questions. They may not break open cabinets, search private rooms or use force. Do not underestimate it for that reason: the Nachschau is frequently the first stage of a crisis, not a harmless preliminary. It can be converted into a formal audit on the spot — that transition must be communicated in writing — and its findings can trigger proceedings. As a precaution, assume that a voluntary self-disclosure is barred once the inspector appears. What inspectors may do during a Nachschau — and where their powers end — is set out on our page VAT inspection under Section 27b: rights and limits of the unannounced visit.

The search — the “dawn raid” (Sections 102 et seq. of the German Code of Criminal Procedure) — normally requires a judicial warrant and an opened criminal investigation, typically run by the Steuerfahndung, Germany’s specialised tax fraud investigation units. Here the rule is: ask for the warrant and read it — who is accused, of what, for which period, and which rooms, devices and documents are covered? The search must be tolerated; it does not have to be actively assisted. Objections to the removal of specific items can be put on record without obstructing the measure.

The Section 25f assessment, finally, is not an enforcement action but an administrative act — with a one-month objection deadline. Because objection and court action do not suspend enforcement, an application for stay of execution (“Aussetzung der Vollziehung”, AdV) belongs in the strategy from day one. Such a notice often announces the next escalation stage: liability claims, asset freeze, enforcement — see our page on the German asset freeze under § 324 AO.

For corrections and subsequent declarations, a new level of precision has applied since December 2025: Germany’s Federal Court of Justice now treats VAT advance returns and the annual return as separate procedural offences — self-disclosures and corrections must therefore be complete for each individual return. A partial correction that continues to conceal output transactions has no exempting effect. Which is why the filing decision belongs in the hands of VSK’s lawyers and tax advisers before anything is submitted.

The 72-hour plan

VSK’s crisis module structures the first three days into three phases. It does not replace case-by-case advice — it prevents the most expensive standard mistakes.

0–2 hours: secure

1. Activate responsibilities. Management, tax lead, legal and external tax and criminal defence counsel — a small, named team takes over. Everyone else keeps working.
2. Fix the communication line. One person speaks with the officials, politely and factually. No spontaneous assessments, no corridor conversations, no internal all-staff emails full of speculation.
3. Control and log data access. What is being inspected, copied, taken? No uncoordinated export packages out of helpfulness — what must be handed over is handed over, documented and targeted.

2–24 hours: sort

4. Secure and version the transaction files. Records for the disputed supply chains — onboarding, VAT ID checks, payments, transport documents — are consolidated and protected against alteration.
5. Compile red-flag and approval memos. Who checked, assessed and approved what, and when? This is the raw material of exculpation: it documents the decision basis at the time, before memories fade.
6. Capture the measure legally. Audit order or warrant under quick review within 24 hours: addressee, taxes, periods, scope, reasoning. From this follow remedies, the deadline calendar and the shape of further cooperation.

24–72 hours: set the strategy

7. Review AdV, liquidity and § 324 AO strategy; notify insurers within their deadlines. If assessments, liability or an asset freeze are on the horizon, the liquidity defence is built now. In parallel, D&O, criminal-defence legal expenses and special policies are notified within the deadlines of their terms — late notification can cost the cover, and the ability to fund a defence is part of the defence. Finally: defence position, meeting strategy and file-access applications are prepared.

Silence is not an admission — and cooperation is not an end in itself

Precision matters more than toughness here. Nobody is required to incriminate themselves: once a criminal tax investigation has been opened, the tax authorities may no longer use coercive means to enforce cooperation duties in the parallel tax proceedings (Section 393 of the German Fiscal Code). Suspects have a comprehensive right to remain silent; employees, as witnesses, are not obliged to give spontaneous statements on the premises and may refer to a later, prepared examination.

That is not obstruction, and it should not sound like obstruction. Duties to tolerate the measure are met, officials are treated correctly, nothing is destroyed or removed — that would not be defence but its opposite. Between obstruction and pre-emptive self-incrimination, however, lies a wide and entirely legitimate space: statements only after file access and advice; data handed over in a controlled way rather than wholesale; assessments in writing rather than in the corridor. Experience from carousel cases is consistent: it is rarely calm silence that does the damage — it is the well-meant explanation of hour one that later sits in the file as a formal statement.

The other side has rules too. Information requests and data access have limits, and as the case develops the CJEU’s Glencore line applies: the administration may not base its decision on evidence to which the taxpayer had no effective access. A file-access application is therefore not a formality — it is the beginning of your own account of the facts.

Evidence from other people’s proceedings

Carousel allegations feed on findings from proceedings against others: the criminal files of the vanished supplier, examination records from parallel cases, findings against third parties the accused has never seen. The rule is simple: what sits in third-party criminal files may be used against you only if you know it and can comment on it — equality of arms is enforceable. The Court of Justice made this order-proof in November 2025: evidence from criminal proceedings against third parties may be used in tax proceedings only if the rights under the Charter of Fundamental Rights are respected — equality of arms, the right to be heard, the duty to state reasons — and the fiscal court must review this independently instead of simply adopting findings made elsewhere (Fashion TV RO, continuing the Glencore line). For the first 72 hours this means: note every incriminating item that visibly stems from someone else’s case — it later becomes the lever for file access and admissibility objections. Where the European Public Prosecutor’s Office leads the investigation, the toolkit of German EPPO practice is added: judicial review of coercive measures via Section 98(2) sentence 2 of the Code of Criminal Procedure applied by analogy, pre-emptive admissibility objections, and file access extending into the records of cross-border evidence-gathering under Article 31 of the EPPO Regulation.

Why the tax track must run from day one

The most common strategic error in an acute case is tunnel vision on the criminal file. The economic pre-decision almost always falls in the tax proceedings: audit findings, estimates, assessment notices, AdV decisions, liability and asset freezes — often months or years before any criminal court considers guilt. In classic carousel scenarios, suspicion alone can become existential within months if nobody runs the tax side.

VSK therefore works on two tracks from the first day. Criminal defence protects the right to silence, procedural rights and the usability of evidence; the tax track attacks the findings, applies for stay of execution, negotiates security and builds the facts matrix that carries both proceedings. Driving in early markers — objection, AdV, documented challenges to the factual assumptions — prevents a one-sided narrative from hardening into something the fiscal courts later adopt unexamined. The tool for this is the Evidence Pack: the decision basis at the time, made readable, instead of 80 folders.

And afterwards? Once the situation is stable, the real work begins: clarifying facts, organising evidence, fighting multiple assessments, insisting on proportionality. No serious adviser promises you an outcome in hour one. What can be promised is order — and in an acute case, order is half the defence.

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