The archdiocese of Freiburg must pay 10.8 million euros in arrears because of years of errors in the accounting of social security contributions for marginal employees. This is the result of a three-year audit of the German pension insurance scheme.
The total is made up of 6 million euros in unpaid taxes and 4.8 million euros in late payment penalties. The allegation of systematic social security fraud has been cleared by the audit, the diocese said this Tuesday.
Tax audit not yet fully completed
During the simultaneous review of the payroll tax statements of the affected parishes, no particular anomalies have been discovered so far, he said. However, the fiscal review has not yet been fully completed, according to a diocesan spokesman.
Archbishop Stephan Burger said the accounting abuses that came to light in 2017 were rightly objected to. The background to this was changes in the law on marginal employment from 1999 and 2003, which were not taken into account in the parishes or in the payroll accounting. "We have taken many measures to correct these errors and will take care to avoid such errors in the future."He apologized that the processing had taken so long because of the complexity of the procedure.
Financial damage less than feared
Thus the financial damage for the diocese budget turns out to be clearly smaller than feared so far. After the abuses came to light, the diocese formed reserves of 158 million euros, especially in the 2019 budget. This sum was considered to be the maximum limit for any additional claims and penalty payments by pension insurance and tax authorities.
Now at least 130 million euros of the provision will not be needed for back payments and will therefore be freed up again. This would result in a net profit of 67 million euros for the 2019 annual financial statements, the diocese said. This could open up financial leeway, especially in view of the expected decline in church tax revenues due to the Corona pandemic and the austerity measures that are therefore planned.
Burger said the reserves now freed up could help "compensate somewhat for expected shortfalls, so that we can continue our work in many places in the parishes and institutions". Especially during pandemic, it's important for church to accompany people, he said.
More than 1.000 marginal workers affected
At the end of October 2017, the archdiocese had made public that for years and in numerous parishes there were irregularities in the calculation of social security contributions. Accounts going back to 1999 were examined. More than 1.000 marginally employed persons for whom the parishes paid no or too little, such as janitors, sextons and organists. According to reports, it was also a matter of violations of the tax regulations for monetary payments on the basis of so-called honorary and exercise leader allowances.
According to the archdiocese, the first irregularities were discovered during a routine audit of pension insurance in a church clearinghouse. These offices take over payroll accounting for the parishes.
Parallel to the now completed investigation of the pension insurance and the tax offices, the diocese commissioned auditors internally. Here, Burger said, it has been possible to improve administrative processes and structure them more clearly.