Digitalization is ubiquitous. In all daily situations, one is confronted with digital media. Be it online shopping, the app for the car, the step-tracking app or everyday messenger communication. Even in front of the seemingly dusty tax world, it does not stop. Paper forms and large mountains of documents became digital forms and the submission of documents for tax declaration via Elster. It is important to consider the extent to which these changes bring advantages and challenges.

1st Advantages of the digital tax declaration

1.1. factor time

The biggest advantage of digitalization is probably the enormous saving of time. Previously, it was necessary to drive to the tax office to pick up the tax return forms or submit them together with documents. And then there was the manual filling of paper forms. Today, this can be done directly from home via Elster. When submitting forms digitally, the obvious errors are displayed directly and can be avoided right from the start. In the case of paper forms, these would first have to be clarified before the tax audit can start.

1.2. factor flexibility by submitting a digital tax declaration

A further advantage is the flexibility. Digitalization allows the tax declaration or the submission of other forms to be completed at any time. The Internet has no opening hours and therefore does not have to adhere to office hours. Accordingly, this is very lucrative for working people who are not able to drive to the tax office at normal opening hours to fulfill their tax obligations. This brings enormous flexibility.

1.3. factor Precalculation of the tax when submitting a digital tax return

Another advantage is the automatic calculation of the tax payable/refundable at the end of each tax return submitted. This provides a certain transparency for tax laymen or tax-unadvised taxpayers and does not present them with unfinished facts when issuing the corresponding decision.

1.4. factor safety

The digital transmission of the tax return inevitably leads to a tracking of the submitted forms with automatic confirmation of receipt. With an analogue tax declaration, however, this looks completely different. Thus, one does not receive a confirmation when entering the mailbox outside the opening hours of the tax office. And in the case of postal mail, you will receive a confirmation only in the case of an expensive mailing with registered letter and receipt by post. Thus, one can finally rule out the argument that something has not arrived or is present.

The digital transfer of forms and the tax declaration via Elster can only be realized with 2-factor authentication. This means that you need a password and another option (certificate file, online ID card, Elster USB stick, Elster signature card). As a result, this encryption brings enormous security.

1.5. factor Environmental protection

In addition, the digital transmission of tax returns contributes to the protection of the environment. The absence of paper saves resources and the lack of mailing saves emissions.

2nd challenges of digital tax declaration

However, these security options must first be requested. For example, the Elster security certificate must be applied for online. This is associated with a one-time high effort, which can be a considerable obstacle for older and IT-averse people.

In addition to the emphasis on the security of personal data, which is a top priority for financial administration, there are therefore concerns about data protection. Tax data is one of the most sensitive data of any taxpayer. Therefore, of course, there is a certain risk of insufficient protection when using apps to create digital tax returns. Furthermore, there are concerns about possible security leaks in the financial administration, which is a loss of personal tax data in the room. This is also a big topic on any tax advisor’s agenda. This inevitably leads to a large financial investment in digital security systems.

Another challenge of digitally transferring tax returns can be the complexity of forms on Elster. These can easily seem confusing and quickly overwhelm a person who uses magpies only once a year. Because if there is a lack of tax knowledge, this certainly carries the risk of not registering tax deduction options, since something simply disappears due to the confusion. Therefore, many people may turn to a tax consultant again. This in turn leads to higher costs for the tax declaration, which was actually very easy to create digitally.

3rd Digital Tax Declaration – Conclusion

Finally, it can be stated that the advantages of the digital tax declaration exceed the risks. Consequently, a return to the old standard is no longer contemporary. The digitalization of financial management processes has only really begun and will be further expanded. The risks involved must not be underestimated and will inevitably occur at some point. However, this has to be accepted, as the efficiency and optimization of tax processes can only run via digitalization.