Whereas in the past the focus of tax audits was on checking documents, today IT does this for the auditor. The auditors usually have the accounting data sent to them in electronic form in advance of the audit. For example, your cash account is checked for plausibility within seconds. Specialists at the tax office then evaluate this data using a program (IDEA). The results show anomalies and give the auditor important information on what to look at.
For example, this could be an unusual value or an entry that is not consistent due to the name and amount. IDEA can also provide far-reaching insights when checking accounts receivable, inventory, cost centers or loans. For example, IDEA can also check the summation of numerical fields for plausibility or whether an invoice has been issued for a specific transaction and whether the invoice amount has been posted to an account. Multiple entry analyses can uncover duplicate payments to suppliers, multiple entries of the same article number during stocktaking or when determining duplicate names or addresses for insurance claims. In addition, a tax auditor will not only refer to data from your company, but also to control notifications from other tax offices – even from abroad.
Today, tax auditors mainly deal with contract audits and – if applicable – cross-border deliveries and services within a group of companies. As part of contract audits, it is checked, for example, whether a certain internal transaction or transaction with employees or shareholders was based on a previously concluded and signed contract and whether the selected conditions were at arm’s length. The appropriateness of the selected transfer prices must be proven in the context of intra-group cross-border deliveries and services. If certain limits are exceeded, transfer pricing documentation must be submitted that meets the strict formal and material requirements of the legislator. Anyone who does not comply with this within 30 days of receiving the audit order can generally expect severe penalties. These range from hidden profit distributions and corrections in accordance with Section 1 AStG, to fictitious profit estimates by the tax office, to surcharges and interest. In addition, cross-border deliveries and services are examined to determine whether the complex VAT and customs regulations have been complied with. In the latter two areas in particular, the auditors repeatedly identify errors that could have been avoided if the facts of the case had been carefully analyzed.
In 2023, 12,394 auditors were active in tax audits throughout Germany. An additional tax result of around 13.2 billion euros was recorded, of which 10.2 billion euros was attributable to audits of large companies.
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