VW Faces Fresh Probe Over Tax Violation Claims in Germany

Updated on
  • Braunschweig prosecutors are investigating five suspects
  • New investigation separate from diesel scandal probe

Volkswagen AG is facing a new criminal investigation after publishing incorrect emissions data that gave some drivers tax breaks that may have been unjustified.

Prosecutors in Braunschweig, already looking into Volkswagen diesels, are now formally examining tax issues linked to faulty carbon-dioxide readings as well, spokesman Klaus Ziehe said by phone Tuesday. A separate probe was necessary because the accusations involve other cars and other people, he said. Five suspects are being investigated, Ziehe said, without identifying them.

“German prosecutors like these kinds of investigations,” said Michael Kubiciel, a criminal law professor at the University of Cologne. “It’s easier to pursue charges under German tax law than under environmental protection rules.”

Volkswagen has said the people who bought the cars won’t have to pay the difference in taxes. The bill adds to the mounting tab of recall costs and regulatory fines the carmaker faces over irregular and falsified vehicle emissions, a scandal that began more than two months ago with Volkswagen’s admission to rigging diesel engines in 11 million vehicles worldwide.

Tax Rates

The CO2 issue arose Nov. 3, after the automaker said about 800,000 cars, mostly in Europe, had emissions of the greenhouse gas that didn’t match up with the levels promised. That matters because CO2 is a key measure for setting tax rates for motor vehicles in many European countries. Improperly labeled cars with higher-than-marketed emissions may lead authorities to reclaim the tax breaks.

Volkswagen estimated the financial risk of manipulating the ratings at about 2 billion euros ($2.1 billion). That sum includes paying governments for missing tax revenue. 

The carmaker already set aside 6.7 billion euros in the third quarter to fix diesel cars with engine software that allowed them to pass emission tests by illegally restricting pollution during testing.

European regulators have approved Volkswagen’s proposals for how to repair about 70 percent of the diesel engines affected worldwide, Chief Executive Officer Matthias Mueller told a gathering of executives in Wolfsburg, Germany, on Monday.

The shares rose 5.5 percent to 115.90 euros in Frankfurt, the most since Oct. 7. The company has lost 15.4 billion euros in market value since the scandal broke on Sept. 18.

Meanwhile, Volkswagen’s Audi division will resubmit a revised version of software that the U.S. Environmental Protection Agency and California Air Resources Board has targeted in its latest probe. If approved, the fix for 85,000 Audi, Volkswagen and Porsche cars with 3.0-liter diesel engines should cost roughly 50 million euros. EPA and CARB will review and test the revised software.

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