The Bundestag and the Bundesrat adopted the DAC7 Implementation Act on 10 November and 16 December 2022 respectively. However, the changes affecting in particular external testing (operational testing) are not relevant until 01.01.2023 or 01.01.2025. In the following, we give you an overview of the new regulations adopted for operational auditing.

1. changes related to the test order

Due to the new regulations on auditing, the tax authority may request the submission of documents subject to recording or storage or the transmission of data within a reasonable period of time with the audit order (§ 197 (3) sentences 1, 2 AO). The law does not contain a definition of the “reasonable period”. However, a period of 30 days should normally be appropriate. This should make examinations faster and more effective, because examination focal points can be formed precisely.

If taxpayers have submitted the requested documents, the tax administration should inform them of their audit priorities. There is no restriction of the external examination to certain situations pursuant to § 194 AO (§ 197 paragraph 4 AO). Through this change to the audit, the legislature wants to “reward” taxpayers who are willing to cooperate. This will give them the opportunity to better prepare for the exam.

In addition, audit injunctions for tax or tax rulings are now to be issued until the end of the calendar year following the calendar year in which the tax ruling took effect. However, it should be noted that this provision applies only to tax or tax ruling decisions issued on the basis of a tax return filed by a tax consultant (§ 197 (5) sentence 1 AO).

2nd audit amendments: transfer pricing documentation

Until now, under the DAC7 Implementation Act, the legislature stipulated that entrepreneurs should submit complete transfer pricing documentation within 30 days of the announcement of the audit order (§ 90 (4) AO).

The fourth bureaucratic discharge law (BEG IV) reduced this submission requirement. Accordingly, the transaction matrix, a master file and the records of the exceptional transactions must be submitted within 30 days (§ 90 (4) sentence 3 AO). In the context of the external audit, the auditor may request the submission of the complete transfer pricing documentation independently.

If the transfer pricing documentation is not available on time, you have to expect the fixing of surcharges (§ 162 paragraph 4 AO).

3. Changes to the audit: Qualified request for participation

The introduction of a qualified participation requirement is a completely new regulation in the context of an audit. Due to this change to the audit, the taxpayer can be requested to participate in a (written or electronic) request for participation after six months from the announcement of the audit order (§ 200a (1) sentence 1 AO). This is a discretionary decision (§ 5 AO). Incidentally, there is no need for any further justification for issuing the qualified request for cooperation if the tax authority has informed the taxpayer of the possibility of a qualified request for cooperation and the taxpayer has nevertheless at best insufficiently fulfilled his obligations to cooperate (§ 200a (1) sentence 2 AO).

Due to the changes to the company audit, the qualified request for participation should normally only be applied if the "simple" request for participation (§ 200 AO) was unsuccessful. The request for participation must in principle be fulfilled within a period of one month (§ 200a (1) sentence 4 AO). Otherwise, there is a risk of a delayed participation allowance (§ 200a paragraph 2 sentence 1 AO). It is 75 euros for each full calendar day of the delay in cooperation. However, such a determination applies for a maximum of 150 calendar days (§ 200a paragraph 2 sentences 2, 3 AO).

In addition, a surcharge to the cooperation delay money can be set if a cooperation delay money has been set in the last five years before the first day of the cooperation delay and there is a fear that the taxpayer will not comply with his current obligation without a surcharge to the cooperation delay money, or there is a fear that the taxpayer will not comply with his current obligation without a surcharge to the cooperation delay money (§ 200a paragraph 3 sentence 1 AO). It amounts to a maximum of 25,000 euros for each full calendar day of the delay in cooperation and is to be fixed for a maximum of 150 calendar days (§ 200a paragraph 3 sentence 2 AO).

4. Operational test changes: limitation of runway inhibition

For process inhibition in operational audits according to § 171 paragraph 4 AO, there is now also a new legal regulation. It is true that the determination period does not expire until the tax determination is incontestable if an external examination has begun before the end of the determination period or the start of the examination has been postponed at the request of the taxpayer (§ 171 (4) sentence 1 AO). However, the expiry restriction is now limited to no later than five years after the expiry of the calendar year in which the examination order was announced (§ 171 (4) sentence 3 AO). The aim of limiting the process inhibition is to accelerate operational tests. In addition, this will provide greater legal certainty with regard to the latest date of completion of the audit.

5th change to the operational audit: a new correction requirement

Under the extended notification and correction obligation, taxpayers must now check whether audit findings have an impact on tax returns already submitted for years that were not subject to external audit. If this is the case, they must correct it.

Example: In 2026, an audit will take place, which is limited to the year 2024. In doing so, the auditors determine the need for tax corrections. In fact, this also applies to issues that are relevant in the tax return for 2025. The changes to the audit now require that this tax return also be adjusted without a separate request from the tax authority.

The extension of the notification and correction requirement is of considerable importance in practice. Finally, a breach of this obligation leads to tax evasion or reckless tax reduction. Consequently, this can be punished according to § 370 AO (tax evasion) or § 378 AO (reckless tax reduction).