A German tax lawyer took advantage of a very unusual case to earn €450,000. His client earned little money, but the government mistakenly attributed an enormous income to him and sent him a proportionate tax bill:
In 2001, a German pensioner went into the tax collector’s office to fill out his tax return. He put down an annual income of €11,000 — which, it turns out, was an error. He filed a correction, restating his income to be €17,000. Unfortunately, the tax official working on his paperwork failed to enter the correction properly. Instead, the pensioner’s income was listed at an absurd €1,100,017,000 — the GDP of a tiny country.
Given those “earnings,” the pensioner’s tax bill came in at €287 million and change.
Clearing up the error was not hard. The pensioner’s lawyer, Dr. Graefe, simply wrote a letter to the German tax authorities explaining the error. His client’s tax liability was corrected and he went on with his life. Dr. Graefe, thereafter, looked to collect his fee.
In the United States, typically, the client pays the fee for services provided, and in a matter like this, the fee would (likely) be an hourly one; the American equivalent of Dr. Graefe would probably earn $100 or so. Not bad. But in Germany, the law holds that when an attorney wins such a reduction, the lawyer’s fee — paid for by the tax man — is a percentage of said reduction. In this case, Graefe’s cut should have been about €450,000, but of course, the tax department disputed this amount as excessive.
The court agreed with Graefe’s reasoning and paid him.
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