Trust your government's tax department

Interview: "I never wanted to be a referee, I always wanted to be a player"

It is the end of August when Michael Sell not only says goodbye to his summer break, but also to his colleagues in the Federal Ministry of Finance. "It is part of the business foundation of political officials that they are retired as part of a change of government - especially in politically sensitive departments," he wrote in his farewell email.

Michael Sell

For 60-year-old Sell that means: after almost 25 years in administration and after all six and a half years as head of the tax department, he is handing over the management. His successor will be Dr. Rolf Möhlenbrock, who was previously responsible as a sub-department head for income and corporate taxes, among other things.

JUVE Steuermarkt spoke to Sell about the background to his departure.

JUVE Steuermarkt: As a department head with a CDU party book, you have to relinquish the management of the tax department as part of the change of government - is that simply the fate of the political official?
Michael Sell: That is not fate, but the possibility, wanted by the legislature, for the minister to fill central work units of his house with people who have his political confidence, regardless of personal appreciation. In my experience, “the party book” does not play a role - I have made significant career steps under the current Federal President in his former position as head of the Federal Chancellery. I think it's more about basic attitudes on the respective political issues.

You started your career in a large tax consultancy and auditing company, but you have already announced that you no longer want to switch to a consulting company. Why?
Objective: There are highly qualified design consultants in Germany who have competently dealt with this for decades. Others have a much better command of the field of work. Subjective: I was never intrigued by topics related to tax optimization. I switched to finance management in 1993 for a reason.

You will be retired when you are just 60, so you will certainly not be idle in the years to come. What would you challenge?
I never wanted to be a referee, I always wanted to be a player. I have always been interested in the well-kept dispute both in the tax policy dispute and in the courtroom. I would therefore like to work forensics again, as I did at the beginning of my career, both in criminal and tax law. This also applies to the area of ​​secondary suits, i.e. representing victims in criminal proceedings.

In your farewell e-mail you also talk about the topics that you have dealt with in recent years - including modernizations such as travel expense reform, the dismantling of the cold progression, the BEPS project, the investment tax reform. In retrospect, what was a project close to your heart that you enjoy looking back on?
The consideration of the cold progression as part of the adjustment of the income tax rate was overdue. The success of the reform was partly due to the fact that there was only minimal inflation during this period. The importance of this policy change will become noticeable on the time axis even with an annual inflation of 2 percent. With the report on cold progression, which is to be prepared every two years, the subject keeps coming up on the political agenda. In addition, there has been a change in mentality in recent years: tax evasion as a criminal offense or unlimited tax avoidance as a design goal are no longer “cool”. I was allowed to contribute to that.

In view of your experience with the investigations into cum-ex and cum-cum deals, is there any piece of advice you would like to give to the consultancy industry?
The consulting industry doesn't need my advice. But let me name one experience. Apart from a very few cases (including cum-ex cases), the initiative to reduce taxes does not come from the consultant. Sometimes the consultant has to protect his own client from himself. Anyone who does not leave the church in the village for design advice should not be surprised at the counter-reactions of the legislature or the climate in tax audits.

Is there anything that politics and administration can learn from the dilemma surrounding the “tax avoidance” business?
Just as there are minimum standards in the area of ​​the environment and working conditions, there should be minimum but also maximum tax burdens for entrepreneurial activity. Unlimited tax competition or turning the tax screw without compelling (!) Reasons harm all countries. Until the establishment of income tax tariff tunnels similar to those of sales tax, we need something that is known in English as “tax intelligence”, i.e. the systematic and permanent detection of tax gaps. It is important to operate the business model of the "design consultant" from the point of view of the tax authorities.

What will your last official act be?
Together with the technically competent colleague, I will represent the Federal Ministry of Finance that has joined the proceedings before the Federal Fiscal Court in a case relating to the public benefit.

The interview was conducted by Ulrike Barth.