Trouble with the tax office?
For entrepreneurs in Germany - Save yourself the trouble with the tax office with these 3 tips (part 2 of 3)
Today in the second part of the series
Tip 2: Relocating electronic accounting abroad
Everyone is talking about digitalization and streamlining processes. Administrative processes such as accounting are often outsourced. It often happens that an affiliated company abroad takes over the bookkeeping. In today’s age of electronic accounting, this is certainly not a problem if the relevant formalities are observed.
Approval must be obtained from the tax office for the relocation of electronic bookkeeping abroad. Since 2021, the legislator has differentiated between the relocation of electronic bookkeeping to another EU country and to a third country.
You read correctly, it is only about electronic bookkeeping! This is because the books and records must still be kept and stored in Germany. This distinction is important, as this is often confused in practice. The original receipts, in particular paper invoices, must remain physically in Germany!
In the EU case, the following now applies:
There will no longer be an obligation to apply for relocation in the EU from 2021. However, in this case you must ensure that the tax office continues to have access to your data, e.g. as part of a tax audit.
If data access is not ensured, the tax office can impose a late payment penalty (see below).
In the case of third countries, please note the following:
The approval of the tax office must be obtained before moving to electronic bookkeeping. Certain information must be provided in the written application to the tax office:
- Information on the location of the data processing system
- Confirmation that you have properly fulfilled your obligations to cooperate in the past
- Confirmation that the tax office's access to data is still ensured and
- taxation is not affected
If the tax office grants its approval, the electronic bookkeeping can be relocated. However, the tax office can also withdraw its approval if the requirements are not met. In this case, there is an obligation to keep the electronic accounts in Germany or in another EU country. The relocation is therefore associated with a certain amount of effort.
What happens if you don't follow the rules?
The tax office can impose a so-called delay penalty. The delay penalty can amount to between EUR 2,500 and EUR 250,000. This can occur in the following cases:
- the requested relocation is not complied with
- Data access is not granted
- the obligation to cooperate in the context of a tax audit is breached (also applies if the accounts are kept in Germany)
Practical tip
The new regulations from 2021 have made things easier for companies in the EU. There is no need to submit an application to the tax office. Nevertheless, you should not violate your duty to cooperate or go too far in the course of a tax audit. I have already experienced cases in which a late payment penalty was imposed on more than one company in the group of companies because the obligations to cooperate were not met.
The article uses simple language for better understanding and is also abbreviated with regard to the individual conditions required by law. An individual examination in your case is therefore recommended.
Please feel free to contact me!
To read more:
The approval requirement is based on Section 146 (2a), (2b) and (2c) of the German Fiscal Code.
Disclaimer
This article does not constitute legal or tax advice, but is for general information purposes only. Every situation is individual, so I always recommend professional advice to avoid tax disadvantages.
Last updated 12.10.2021
