Auditing PC by Paper Records and not Digitally

The tax authorities have the right to audit your tax records online. But what happens if you submit all your records (§147 VI AO) for bookkeeping on paper and deny online access? The first judgment on this matter has come from the FG Rhineland-Palatinate (January 20, 2005, re 4 K 2167/04).

If you have any experience with the German fiscal system, supposedly you can guess what the judges said. They ruled that even if you hand in all your accounts and journals on paper, the tax authority still has the right to demand that all this data submitted on a CD-ROM. The submission of a CD-ROM is correct use of discretion because the statute allows for direct access to the company’s bookkeeping system, either by personally working in the program or with the assistance of an employee. In comparison with the legal possibilities, the CD-ROM is the lesser encumbrance and therefore justified.

Practical Hint:

Recently, the Finanzämter have started adding a questionnaire to their audit orders to examine the your electronic bookkeeping system. Anyone who receives such a questionnaire can expect that the fiscal office wants to see your accounting data in electronic form. It would be a good idea to prepare, together with your attorney or tax advisor, a CD-ROM showing only the tax-relevant accounting.