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More protection planned for whistleblowers

Be it Lux Leaks or Panama Papers, many tax scandals that hit the headlines in recent years would have remained undetected without information from whistleblowers. Nevertheless, the protection of these informants by companies has been regulated inconsistently within the EU up to now.

Recently, there has been increasing criticism of the whistleblower protection available up to now - also with reference to Germany. In order to protect whistleblowers better from state and corporate sanctions, the European Commission has now published a proposed directive that includes various protection mechanisms for whistleblowers. Accordingly, a three-stage reporting system should be specifically introduced. Internal reporting channels should give whistleblowers the opportunity to address illegal activities internally first. If the internal procedure shows no sign of success, whistleblowers should in future also have the opportunity to report illegal activities to government supervisory authorities. If this route remains unfruitful too, public announcements or reports in the media are to be permissible.

According to the proposed directive, companies and authorities will have explicit duties to report back. In addition, any retaliatory measures against the informant are prohibited. If informants do suffer corresponding sanctions all the same, they are to receive legal advice free of charge and suitable remedial assistance and adequate protection in court proceedings. What is more, the burden of proof is reversed in these cases, i.e. affected corporations and organizations must prove that no retaliatory measures have been undertaken. The enhanced protection is to apply comprehensively and not just be granted to employees, but also contractors, suppliers, interns or applicants, etc. The proposed directive will pertain to all corporations with more than 50 employees or an annual turnover of more than 10 million euros. This proposal will also pertain to national, regional and local authorities with more than 10,000 residents.

Conclusion: Corporations would be well advised to take the proposed EU directive for the improved protection of whistleblowers seriously. As compliance aspects are becoming increasingly important particularly also for entrepreneurs and corporations, the proposed directive should therefore be analyzed together with a experienced specialist advisor to assess its feasibility and implemented as a preventative measure.

 

Dr. Michael Rutemöller, LL.M. (Taxation) in an attorney-at-law/specialist attorney for tax law at PKF WMS Dr. Buschkühle PartG mbB Rechtsanwälte Steuerberater, co-operation partner of PKF WMS Bruns-Coppenrath & Partner mbB Wirtschaftsprüfungsgesellschaft Steuerberater Rechtsanwälte (member company of the PKF network).

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