Tuesday, April 15, 2014

"Black" Money and Luxembourg

The Local.de put up an article today....related to German customs folks and the search of an older German couple crossing Luxembourg into Germany.  The story goes....customs folks stop them....ask to search, and then come across 200,000 Euro....taped onto the various body elements of the two (yeah, even the genitals as the article described the situation).

There's a hefty fine involved in this cash and carry deal.  Questions will be asked.  Time in jail?  I doubt it.  But of the 200,000 Euro....I suspect they will lose at least a quarter of the money in fines and lawyer costs.  Additional money in Luxembourg?  Well....they will be questioned and asked to sign statements.  Basically, if you lie.....you could owe more money.

All of this brings one to the topic of Luxembourg and hidden money.  Generally, for the past fifty-odd years....Germans have hidden money in Luxembourg.  They'd done in simple ways, and in complex ways.

Banks in Luxembourg used easily allow German customers....but times got tough and regulations more difficult.  Then Germans got into buying property....quietly....and putting secret money into assets like that.  Some Germans even get into deals of investing with some Luxembourg resident to buy a pub or hotel.....letting them hold the asset until they are ready to part company.

German society is fairly negative about tax episodes.  Germans work hard for their money, and don't see much reason to hand over thirty to fifty percent of what they make.  You have lots of craftsmen now....carpenters, roofers, plumbers....who do weekend work and make 30,000 to 100,000 Euro a year in secret money.  Taking a weekend job....you could easily make 4,000 over two weekend, and you really don't care to admit the money and pay taxes.  So it makes sense to hide it.

German customs folks got smart over the years.  Every single road leading out of Luxembourg is generally monitored at various times of the day.  You can cross the river....into Germany....make it three to five miles....thinking you are completely safe, then turn the corner and find a roadblock.  I had this to happen once.  They ask to look in the car, and if nothing suspicious is noted....they let you go (as in my case).

Round the clock coverage?  For the most part.  Patrols lessen at night, I am told....and if you transit via the autobahn....you might have a higher chance of no customs stops.  However, even on the autobahns....the customs folks have authority to pass you.....give you the light, and pull you over.

A decade ago....I was watch German news and they had this craftsman with a RV.  He and the wife were driving from Germany into Luxembourg and were likely less than 500 yards from the border.  Pulled over....the customs folks search the whole vehicle top to bottom....then come to the coffee can.  Bundled up....there must have been around 25,000 Euro in the can (in big bills).  They asked his intent but he kept quiet.  They end up filing a report on this, and some audit will be done down the line.  Lawyer costs?  You can figure he had to engage a big-name guy and pay out at least 15,000 Euro to clear himself.

My general advice on this?  It's best to avoid these situations entirely....but if you were stupid enough to desire crossing into Germany with 200,000 Euro.....I'd find myself a rubber raft.....cross the river at midnight, and drive safely out of the Luxembourg region on secondary roads between midnight and 6AM.  I doubt if any of the customs folks are on duty at that time....and if so....most are likely around the autobahn area.

Finally, I'm pondering over what this elderly couple was intending to do with the 200,000 Euro they were sneaking over.  A new house?  Paying off some debt?  A big villa?  A new business?  It would have been curious to know how they were going to use the money.

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