The German View on Cross-Border Tax Audits
By Brigitte Jakoby, Jakoby Dr. Baumhof - Wirtschaftsprüfer Steuerberater Rechtsanwälte
Since the introduction of the Mini One Stop Shop (“MOSS”) within the EU, cross-border tax audits have been an important, but still unresolved issue. EU Member States have not yet been able to agree on harmonised rules for conducting cross-border tax audits. A leaflet published by the German Ministry of Finance on cross-border tax audits now seeks to answer some of these issues/ questions. The leaflet deals with the purpose of cross-border audits.
In theory, cross-border tax audits seek to provide amicable solutions for all EU Member States, but the various national tax authorities determine the legal consequences independently, based on their own national VAT law. Hence, despite a coordinated external audit the tax authorities may take a different legal evaluation. So, whereas coordinated tax audits would reduce the risk of double taxation, they do not rule it out altogether.
The German Ministry of Finance differentiates between simultaneous and joint tax audits. Simultaneous tax audits are carried out by the national tax authorities at the same time, but independently. Tax authorities then exchange the information between each other. Joint tax audits would see the authorities investigate the facts together. This would avoid different interpretations. Another advantage of joint tax audits would be that the authorities determine the key areas of the tax audit together. This reduces the potential for conflicts. In the case of cross-border tax audits, the official language would remain German but the participating tax authorities and taxable persons can agree on another language.
The leaflet of the German Ministry of Finance is a step in the right direction. It seeks to eliminate some of the legal uncertainties. The first tax audits concerning MOSS can be expected to occur in the not too distant future. Companies who participate in the MOSS should start preparing for such tax audits. The clock is ticking.
Brigitte JakobyJakoby Dr. Baumhof - Wirtschaftsprüfer Steuerberater Rechtsanwälte, Rothenburg o.d.T., Germany
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Jakoby Dr Baumhof – Auditors Tax Consultants Lawyers – is a medium-sized interdisciplinary company located in the south of Germany, with offices in Rothenburg o.d. Tauber, located in Northern Bavaria, and Ebersberg, near Munich.
Brigitte Jakoby is a German Chartered Accountant and German Certified Tax Advisor. In 1987 Brigitte Jakoby started collaborating with her husband Eugen Jakoby, also a German Chartered Accountant and German Certified Tax Advisor. Since 1996 and still today, she is one of the senior partners at Jakoby Dr. Baumhof - Auditors Tax Consultants Lawyers.
Published: Winter 2017 l Photo: nmann77 - Fotolia.com