In each tax assessment notice (for value-added tax (VAT), trade tax, corporation tax, income tax, etc.), which you get from the tax office, you will find one or two special sentences under “Art der Steuerfestsetzung” ("type of tax assessment"), either:
(A) „Der Bescheid ergeht nach § 164 Abs. 1 AO unter dem Vorbehalt der Nachprüfung. Der Bescheid ist nach § 165 Abs. 1 Satz 2 AO teilweise vorläufig.“
(“The tax assessment notice is issued in accordance with section 164 (1) Revenue Code and is subject to verification by a later tax audit.
According to § 165 (1) sentence 2 Revenue Code, the tax assessment notice is provisional.”)
(B) “Der Bescheid ist nach § 165 Abs. 1 Satz 2 AO teilweise vorläufig.“
(“According to § 165 (1) sentence 2 Revenue Code, the tax assessment notice is provisional.”)
In other words, in the second case (B), the "subject to verification by a later tax audit" is missing.
This is essential for the future because there you can see clearly what still could be coming your way (from the German tax office), or not.
Taxpayers - persons or companies - prefer the amount of taxes they owe to be definitively and rapidly determined so all financial issues are clear.
In the first case (A) - see above, both sentences contained in the tax assessment - the tax office endeavours to determine the taxpayer's tax liability as quickly as possible, but under the reserve to verify it later by a tax audit, because in the haste errors might have crept in. This tax audit can be carried out by the tax authorities at any time during the following 4 (in cases of tax fraud up to 10) years, with prior notice (2 to 4 weeks). Very often, the tax audit entails additional costs for the taxpayer, not only because the accountant must also be paid for the supervision of the audit, but also because interest amounts are collected in addition to possible tax payments.
Much more interesting and desirable, however, is the second case (B):
The tax office has quickly set the amount of the tax liability and waives the right to audit the tax matter later. For you (person or company) this means:
1) With regard to the tax matter in question (mostly, fiscal year), you do not have to reckon with any additional costs, never again - not for the tax office, not for accountants. You have financial clarity, security and freedom.
2) Your accountant has done a very good job - the tax office is convinced of the correctness of the accounts, the annual accounts and the tax returns, and does not see any need to review them again.
However, one essential requirement for this excellent tax outcome is that all financial transactions are well documented and all supplementary tax-relevant information is entirely available.
MBA for Finance and Financial Services (UK), Steuerfachwirt (GER)