Income tax review

The income tax review serves to monitor and ensure a proper withholding and payment of income tax.

Income tax review

A so-called income tax review was introduced upon the introduction of the Mutual Assistance Directive Implementation Act. This is an additional audit option at the tax authorities disposal without they can perform without a prior announcement.

The income tax review serves to monitor and ensure a proper withholding and payment of income tax. There is a corresponding ruling in the turnover tax field – the turnover tax review. It should also ensure the prompt clarification of tax-relevant matters.

To date it is the case that income tax external audits must be announced (in writing) before the start of the audit and make it possible for the taxpayer to prepare for these audits. The tax authorities are therefore unable to gain a spontaneous impression of a company.

The legislator wishes to enable the tax authorities to gain an impression of the spatial conditions, the actual staff employed and the usual business operations by means of the introduction of the income tax review. The review should not displace the external audit which is also announced in advance. Instead it facilitates the transition to an external audit.

An income tax review is permissible during the normal business and working hours. In this case the tax officers may enter properties and rooms of persons who exercise a commercial or professional activity without a prior announcement and aside from the income tax external audit. You are obliged to issue wage and salary documents, records, books, business papers and other documents and to issue information upon request.

We recommend the following approach:

  • Do not attempt to turn away the auditor. In all probability he will return accompanied by the police.
  • Ask the auditor to show you his identity card and kindly request that the auditor wait sufficient time for us to attend as your consultants.
  • Inform us immediately so that we can assist you.
  • You should only hand over documents to the auditor when we or an employee is in attendance.
  • If the auditor wishes to have copies, produce these copies and also produce a copy for yourself. In this way you know exactly what the auditor is looking for and which documents you have handed over to him.
  • In addition you must also grant the auditor access to digital data in the event of an income tax review. This means either directly handing over a data CD to the auditor or granting him direct access to your accouting system or performing analyses for him in your systems.
  • Fundamentally you should think very hard about which statements you wish to make in response to the auditor's questions. If in doubt request that the auditor makes all the requests in writing and also respond to them in writing.


Non-binding consultation

We would be very pleased if you contact us. So we can find out what we can do for you in a non-binding conversation. We are happy to take time for you.

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