Germany's largest auditing and consulting company is experiencing a turbulent Advent season.

On Tuesday, prosecutors and police officers began searches of PwC employees' corporate buildings and homes.

The background is a suspected serious tax evasion.

From business circles it was heard that the searches continued the next day.

It is not only the suspicion itself that is tricky, but also the timing of the raids.

Because on Wednesday, the PwC partners also met to kick off an important meeting, on the agenda of which, among other things, the election of the top German leaders was on the agenda, while public prosecutors were also present.

Mark Fehr

Editor in business.

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It was not possible to find out where the meeting was taking place. However, it is likely to take longer than a day and, in view of the pandemic, will be carried out both in person and online. At the meeting, the PwC partners will, among other things, elect their Germany boss. As an alternative to the incumbent Ulrich Störk, Petra Justenhoven is an opposing candidate, as it became known in October. Justenhoven heads PwC's auditing business in Germany and is a member of PwC's German management team, whose spokesperson is Störk. PwC employs 12,000 people in Germany and most recently achieved an annual turnover of 2.3 billion euros. The company plans to present current figures for the past financial year in the coming week.

The current searches concern the tax consultancy division, but are a severe blow to the mood throughout the company.

Audit and tax consultancy firms are searched from time to time, but the focus is mostly on the company's clients, not the law firms themselves. In the PwC case, on the other hand, suspicions of serious tax evasion are directed against current and former employees of the company.

You are accused of having accounted for consultancy services provided in Germany from 2012 to 2017 through a PwC company in Switzerland, which is said to have escaped the German tax authorities in the amount of 11 million euros.

250 officers in action

According to the authorities, 250 officers from the intervention reserve of the Frankfurt Public Prosecutor's Office, the Hessian tax investigation department and the Federal Criminal Police Office were on duty for the searches across the republic. The apartments of four senior and four former senior PwC employees between the ages of 50 and 67 were also searched.

The investigation revolves around the sales tax on tax advisory services. PwC helped mandates to retrospectively tax profits from investments in Switzerland, so that customers would remain unpunished by filing a voluntary disclosure. The legislature deliberately created this pattern as an incentive for taxpayers to uncover their foreign assets. The purchase of customer data stolen from Swiss banks by German tax authorities, which was accelerated from 2010 onwards, has greatly increased the risk of discovery. Not least because of this, the business of tax consultants with voluntary disclosures was booming. The current searches do not focus on tax advice in connection with voluntary disclosures. Instead, it is about the sales tax that would have been due on the billing and payment of these PwC services.

PwC did not comment on the details because the investigation is ongoing.

A spokesman for the company merely pointed out that public prosecutor investigations kept coming up.

PwC has precise processes and clear procedures that are known to the employees.

"We are of course cooperating fully with the authorities and we welcome an early clarification of the situation," said the spokesman.