It is not nuts; it is the law. Not telling the tax department is fraud. Simple as that.
No, it's nuts.
You can go down to the last minute detail, it would never end.
Used that work shower after the gym and didn't tell them? FRAUD!
Used that work phone to make a personal call? FRAUD!
Used that company computer to do
anything personal, FRAUD!
Tax codes can be quite sensible and flexible actually, unless you ask (here it's called a private ruling), then they will likely to say "well, yeah, kinda" and then bog you down forever in paperwork for the most mundane thing.
Take the example above. You use the company shower for personal reasons a few times a week, that costs water and energy, and if you were silly enough to ask they might actually rule it to be a "fringe benefit" which then weighs the company (and possibly you) down in red tape forever for that one silly thing.
Yet if you ever got audited they would never ask "did anyone use the electricity for any personal use?", it's not even on their radar, and they wouldn't want to bog themselves down with investigating such a thing anyway, it's waste of their time. Yet if you were dumb enough to ask for a tax ruling on it, or decided for yourself "it's fraud if I don't", then well, knock yourself out with the compliance of that, it's all on you. Such a thing would be nothing but noise in a company balance sheet.