Last Updated on May 31, 2021 by LawEuro
The Fiscal Code of Germany
Second Chapter
Obligations to cooperate
1st Subchapter
The keeping of accounts and records
Section 140
Account-keeping and recording obligations deriving from other laws
Whoever is obliged under laws other than tax laws to keep accounts and records of relevance for taxation shall be obliged to fulfil the ob¬ligations imposed by such other laws in the interests of taxation as well.
Section 141
The obligation of certain taxpayers to keep accounts
(1) Commercial traders as well as farmers and foresters who, according to the revenue authority’s findings, have had for the respective business
1. transactions, including tax-free transactions but excluding transactions pursuant to section 4 numbers 8 to 10 of the VAT Act, exceeding 600,000 euros in the calendar year, or
2. (rescinded)
3. agricultural and forest Land which they managed themselves and whose economic value (section 46 of the Valuation Act) exceeds 25,000 euros or
4. a profit from commercial operations of more than 60,000 euros in the financial year, or
5. a profit from agricultural and forestry undertakings of more than 60,000 euros in the calendar year
shall be obliged with respect to these operations to keep accounts and on the basis of annual inventories to draw up financial statements even if they are not required to keep accounts under section 140. Sections 238, 240, 241, 242(1) and sections 243 to 256 of the Commercial Code shall apply mutatis mutandis insofar as tax laws do not provide otherwise. In applying number 3 above, the economic value of all areas managed by the farmer or forester shall be decisive, irrespective of whether he owns them or not.
(2) The obligation under subsection (1) above shall be fulfilled from the beginning of the financial year following disclosure of the notice through which the revenue authority indicated the beginning of this obligation. The obligation shall end with the close of the financial year following the financial year in which the revenue authority determines that the conditions under subsection (1) above no longer exist.
(3) The obligation to keep accounts shall be transferred to any person who takes over management of the entire operations as owner or beneficial owner. An indication pursuant to subsection (2) above advertising the beginning of the obligation to keep accounts shall not be required.
(4) Subsection (1) number 5 above in its current version shall apply to profit beginning in the calendar year 1980.
Section 142
Supplementary provisions for farmers and foresters
Farmers and foresters who are obliged under section 141(1) numbers 1, 3 or 5 to keep accounts shall maintain a list of crops in addition to their annual inventory and annual financial statement. The list of crops shall show the types of produce with which the self-managed Land was cultivated in the foregoing financial year.
Section 143
Recording the receipt of goods
(1) Commercial traders shall record the receipt of goods separately.
(2) All goods, including the raw materials, works-in-progress, auxiliary materials and ingredients that the trader acquires as part of his commercial operations for further sale or for consumption, whether for a charge or free of charge, for his own account of for the account of others, shall be recorded; this shall also apply where the goods are to be processed or treated before their further sale or consumption. Goods which in keeping with the nature of the business are usually acquired for the business for further sale of for consumption shall be recorded even where they are used for purposes other than those of the business.
(3) The records shall contain the following information:
1. the date of receipt of the goods or the date of the invoice,
2. the name or the company and the address of the supplier,
3. the usual trade description of the good,
4. the price of the good,
5. a reference to the receipt.
Section 144
Recording the exit of goods
(1) Commercial traders who in keeping with the nature of their commercial business supply on a regular basis other commercial traders with goods for further sale or consumption as auxiliary material shall record separately the exit of goods recognisably destined for this purpose.
(2) The trader shall also record all goods which he
1. delivers on invoice (on credit, on account or by way of offset), by way of exchange or free of charge, or
2. against cash payment where, because of the amount ordered, the good is sold at a price below the normal price for consumers.
This shall not apply where the good is recognisably not destined for further commercial use.
(3) The records shall contain the following information:
1. the date of exit of the goods or the date of the invoice,
2. the name or the company and the address of the customer,
3. the usual trade description of the good,
4. the price of the good,
5. a reference to the receipt.
(4) The trader shall issue for the exit of every good named in subsections (1) and (2) above a receipt which contains the details listed in subsection (3) above as well as his name or the company and his address. This shall not apply to the extent that, pursuant to section 14(5) of the VAT Act, a credit note is used in place of an invoice or simplifications are granted in accordance with section 14(6) of the VAT Act.
(5) Subsections (1) to (4) above shall apply also with respect to farmers and foresters who are required by section 141 to keep accounts.
Section 145
General specifications relating to the keeping of accounts and records
(1) The accounts shall be kept in such a manner as to allow a competent third party to gain an overview of the business transactions and the enterprise’s state of affairs within a reasonable period of time. The business transactions shall be traceable with respect to their origin and course.
(2) Records shall be kept such that the taxation purpose which they are intended to serve can be met.
Section 146
Formal rules on the keeping of accounts and records
(1) Accounting entries and other required records shall be made separately, completely, correctly, and in a timely and orderly manner. Cash receipts and payments shall be recorded on a daily basis. In the case of cash sales of goods to large numbers of unknown persons, there shall be no obligation to make separate account entries as stipulated in the first sentence above, on grounds of reasonableness. This shall not apply if the taxpayer uses an electronic record-keeping system as described in section 146a.
(2) Accounts and records otherwise required shall be kept and stored within the territory of application of this Code. This shall not apply to the extent that for permanent establishments outside the territory of application of this Code local provisions provide for an obligation to keep accounts and records and this obligation is met. In such a case, as well as in the case of controlled companies outside the territory of application of this Code, the results of the foreign accounts shall be incorporated into the accounts of the German enterprise insofar as they are of relevance for taxation. In this regard, any adjustments required in order to satisfy the tax provisions within the territory of application of this Code shall be undertaken and identified as such.
(2a) Notwithstanding the provisions of subsection (2), first sentence, above, the competent revenue authority may upon written application by the taxpayer authorise the keeping and storage of electronic accounts and other necessary electronic records or parts thereof outside the territory of application of this Code. The preconditions shall be that
1. the taxpayer informs the competent revenue authority of the location of the data-processing system and, where commissioning a third party, provides the name and address thereof,
2. the taxpayer has properly complied with his duties arising from sections 90, 93, 97, 140 to 147 and 200(1) and (2),
3. the access to data pursuant to section 147(6) is possible in full, and
4. taxation is not hampered hereby.
Where the revenue authority becomes aware of circumstances leading to the hampering of taxation, it shall revoke the authorisation and require the retransfer without undue delay of the electronic accounts and other necessary electronic records to the territory of application of this Code. The competent revenue authority shall be informed without undue delay of a change in the circumstances specified under the second sentence, number 1 above.
(2b) A fine for delay ranging from 2,500 euros to 250,000 euros may be set where the taxpayer fails to comply with the request to retransfer his electronic accounts or to fulfil his duties pursuant to subsection (2a), fourth sentence, above to afford access to data pursuant to section 147(6), to furnish information or to submit requested documents within the meaning of section 200(1) in the course of an external audit within a reasonable period of time allowed to him for that purpose following notification by the competent revenue authority or where he has transferred his electronic accounts abroad without authorisation from the competent revenue authority.
(3) The entries and records otherwise required shall be made in a modern language. Where a language other than German is used, the revenue authority may require translations. Where abbreviations, figures, letters or symbols are used, each of their meanings shall be clearly defined.
(4) An entry or record may not be changed in such a manner as to render the original content no longer determinable. Furthermore, changes may not be made if their nature renders it uncertain as to whether they were made at the time of original entry or at a later stage.
(5) The accounts and the records otherwise required may also consist in the orderly filing of vouchers or may be kept on data storage devices to the extent that these forms of book-keeping including the method used to this end are consistent with the principles of orderly accounting; with respect to records which are to be made solely on the basis of tax laws, the permissibility of the method employed shall be determined on the basis of the purpose which the records are intended to serve for taxation. Where accounts and the records otherwise required are kept on data storage devices, it shall be ensured, in particular, that, during the retention period, the data are accessible at any time and can be rendered readable without undue delay. This shall also apply with respect to the powers of the revenue authority pursuant to section 147(6). Subsections (1) to (4) above shall apply mutatis mutandis.
(6) These formal rules shall also apply where the trader keeps accounts and records of relevance for taxation without being obliged to do so.
Section 146a
Rules for accounting and record-keeping using electronic record-keeping systems; authorisation to issue ordinances
(1) Any person who uses an electronic record-keeping system to log business transactions or other procedures that require documentation shall use an electronic record-keeping system that records each such business transaction or other procedure separately, completely, correctly and in a timely and orderly manner. The electronic record-keeping system and digital records referred to in the first sentence above shall be protected using a certified technical security system. Such certified technical security systems must consist of a security module, a storage medium and a standardised digital interface. The digital records must be saved on the storage medium and must be kept available in electronic form for inspections and external audits. The commercial advertisement or marketing of (a) electronic record-keeping systems, (b) software for such systems or (c) certified technical security systems that do not fulfil the requirements stipulated in the first to third sentences above, and that are meant to be used for the purposes referred to in the first to third sentences above, shall be prohibited within this Code’s territory of application.
(2) Any person who logs business transactions requiring documentation as described in the first sentence of subsection (1) above shall, at the time that the transaction occurs and without prejudice to other legal provisions, immediately issue a receipt for the transaction and make it available to the party involved in the transaction (obligation to issue receipts). In cases involving the sale of goods to large numbers of unknown persons, revenue authorities may use due discretion and, on grounds of reasonableness and in accordance with section 148, waive the obligation to issue receipts. This waiver may be revoked.
(3) The Federal Ministry of Finance shall be authorised to stipulate, by way of ordinances issued with the consent of the Bundestag and Bundesrat and in consultation with the Federal Ministry of the Interior and the Federal Ministry for Economic Affairs and Energy, rules on the following:
1. the electronic record-keeping systems that must include a certified technical security system, and
2. the requirements pertaining to
a) the security module,
b) the storage medium,
c) the standardised digital interface,
d) the electronic retention of records,
e) protocols of basic digital records to ensure the integrity, authenticity and completeness of electronic records,
f) receipts and
g) the certification of the technical security system.
Fulfilment of the requirements under numbers 2a to 2c above shall be verified through certification by the Federal Office for Information Security, and such certification shall be maintained on a continuous basis. The Federal Office for Information Security may be tasked with specifying the technical security system requirements referred to in numbers 2a to 2c above. Ordinances issued in accordance with the first sentence above shall be sent to the Bundestag. Such ordinances shall be sent to the Bundestag before they are sent to the Bundesrat. The Bundestag can consent to or reject the ordinance by passing a resolution. The Bundestag’s resolution shall be sent to the Federal Ministry of Finance. If the Bundestag has not deliberated on the ordinance following the expiration of three weeks of sittings after the ordinance was received, consent in accordance with the first sentence above shall be deemed granted and the ordinance shall be sent to the Bundesrat.
(4) Any person who uses an electronic record-keeping system as described in subsection (1) above to log business transactions or other procedures that require documentation shall notify the tax office with local jurisdiction under sections 18 to 20 of the following, using an officially prescribed form:
1. the taxpayer’s name,
2. the taxpayer’s tax number,
3. the type of certified technical security system,
4. the type of electronic record-keeping system used,
5. the number of electronic record-keeping systems used,
6. the serial number of the electronic record-keeping system used,
7. the date when the electronic record-keeping system was procured,
8. the date when the electronic record-keeping system was taken out of operation.
The notification in accordance with the first sentence above shall be provided within a period of one month after the electronic record-keeping system was procured or taken out of operation.
Section 146b
Cash inspections
(1) To verify whether cash receipts and cash payments are being properly recorded and accounted for, public officials so assigned by the revenue authorities may – during regular business and working hours, without advance notice and outside the framework of an external audit – enter the business properties and business premises of taxpayers for the purpose of determining facts that may be relevant for taxation (cash inspection). Cash inspections may also include verifications of whether electronic record-keeping systems are being used in accordance with the provisions of section 146a(1). Living quarters may be entered against the will of the occupier only in cases where this serves to prevent imminent risks to public security and order. The inviolability of the home (Article 13 of the Basic Law) shall be limited to this extent.
(2) When requested to do so, taxpayers subject to cash inspections shall (a) furnish records, accounts and other cash management-related documents pertaining to the facts and time periods covered by the cash inspection, and (b) provide information, to the official assigned to conduct the cash inspection, to the extent that this is necessary to determine relevance in accordance with subsection (1) above. If the records or accounts referred to in the first sentence above exist in electronic form, the official shall be entitled to view them, to request that data be transmitted using the standardised digital interface, or to request that records and accounts be made available on a machine-readable data storage device in line with the specifications of the standardised digital interface. The costs shall be borne by the taxpayer.
(3) If the findings of a cash inspection provide grounds to do so, the cash inspection may be turned into an external audit in accordance with section 193 without the need for a prior audit order. Notification that a cash inspection is being turned into an external audit shall be provided in writing.
Section 147
Formal rules on the retention of documents
(1) The following documents shall be kept in good order:
1. accounts and records, inventories, annual financial statements, situation reports, the opening balance sheet as well as the operating instructions and other organisational documents needed for their comprehension,
2. the trade or business letters received,
3. reproductions of trade or business letters sent,
4. accounting records,
4a. documents pursuant to Article 15(1) and Article 163 of the Union Customs Code;
5. other documents to the extent that these are of relevance for taxation.
(2) With the exception of annual financial statements, opening balance sheets and documents under subsection (1) number 4a above (insofar as such latter documents are official documents or informal preference documents that must be signed by hand), the documents listed under subsection (1) above may be kept as reproductions on picture storage devices or on other data storage devices if this is commensurate with the principles of orderly accounting and if it is ensured that the reproductions or the data
1. correspond visually to the trade or business letters received as well as the accounting records, and correspond in terms of content to the other documents when they are rendered readable,
2. may, throughout the duration of the retention period, be accessed at any time, rendered readable without delay and analysed by automated means.
(3) The documents specified in subsection (1) numbers 1, 4 and 4a above shall be retained for ten years and the other documents specified in subsection (1) above for six years, unless other tax laws permit shorter retention periods. Shorter retention periods under non-tax laws shall not affect the periods specified in the first sentence above. In the case of incoming delivery notes that are not accounting records as per subsection (4) number 1 above, the retention period shall end upon receipt of the invoice. In the case of outgoing delivery notes that are not accounting records as per subsection (4) number 1 above, the retention period shall end upon shipment of the invoice. However, the retention period shall not expire if and as long as the documents are relevant for taxes whose assessment period has not yet expired; section 169(2), second sentence, shall not apply.
(4) The retention period shall begin upon the end of the calendar year in which the last entry was made in the accounts, the inventory, the opening balance sheet, the annual financial statement or the situation report drawn up, the trade or business letter received or sent, the accounting record created, the record made or the other documents created.
(5) Persons who submit retainable documents in the form of a reproduction on a picture storage device or other data storage devices shall be required, at their own expense, to make available any auxiliary aids needed to render the documents readable; if the revenue authority so requests, they shall at their own expense print out without undue delay all or part of the documents or furnish reproductions that are readable without auxiliary aids.
(6) If the documents under subsection (1) above have been created with the aid of a data processing system, the revenue authority shall have the right to view the stored data within the context of an external audit and to use the data processing system to examine these documents. The revenue authority may also request within the context of an external audit that the data be analysed by computer in accordance with the revenue authority’s specifications or that the stored documents and records be made available on a machine-readable data storage device. If the taxpayer informs the revenue authority that the data referred to in subsection (1) above are located at the premises of a third party, the third party shall
1. allow the revenue authority to view the data stored for the taxpayer or
2. analyse these data by computer in accordance with the revenue authority’s specifications or
3. make the documents and records stored for the taxpayer available on a machine-readable data storage device.
The costs shall be borne by the taxpayer. In cases where the third sentence above applies, the official assigned to conduct the external audit shall give suitably advance notice of his arrival to persons specified in section 3 and section 4 numbers 1 and 2 of the Tax Consultancy Act.
Section 147a
Provisions for retaining the records and documents of certain taxpayers
(1) Taxpayers whose sum of positive income under section 2(1) numbers 4 to 7 of the Income Tax Act (surplus income) exceeds 500,000 euros in a particular calendar year shall retain for six years the records and documents that pertain to the income and income-related expenses underlying the surplus income. In cases of joint assessment, the sum of each spouse’s or civil partner’s positive income under the first sentence above shall be used to determine whether the amount of 500,000 euros has been exceeded. The obligation under the first sentence above must be fulfilled from the beginning of the calendar year following the calendar year in which the sum of positive income as described under the first sentence above exceeds 500,000 euros. The obligation under the first sentence above shall end with the expiration of the fifth consecutive year in which the conditions specified in the first sentence above have not been fulfilled. Section 147(2), 147(3), third sentence, and 147(4) to (6) shall apply accordingly. The first to third and fifth sentences above shall apply accordingly in cases where the competent revenue authority requires the taxpayer to, in the future, retain the records and documents referred to in the first sentence above because he has failed to comply with his obligation to cooperate under section 90(2), third sentence.
(2) Taxpayers who, alone or jointly with related parties as defined in section 1(2) of the External Tax Relations Act, can exercise controlling or decisive influence, directly or indirectly, over the financial, business or company law related affairs of a third-country company as defined in section 138(3), shall retain for six years the records and documents that pertain to this relationship and all associated income and expenses. This retention requirement shall be complied with from the date when circumstances meeting the criteria specified in the first sentence above first occur. The fourth sentence of subsection (1) above and section 147(2), 147(3), third sentence, 147(5) and 147(6) shall apply accordingly.
Section 148
The authorisation of simplifications
For individual cases or for certain categories of cases, revenue authorities may permit the accounting, recording and retention requirements laid down in tax laws to be eased if compliance with such requirements causes undue hardship and if easing the requirements does not have an adverse impact on taxation. The easing of requirements in accordance with the first sentence above may be authorised retroactively. Such authorisation may be revoked.
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