In January 2017, an Act for the Modernization of the Taxation Procedure (of July 18, 2016, Federal Law Gazette I, p. 1679) has come into effect in Germany, and with it – a NEW OBLIGATION on the part of the ENTREPRENEUR.
When submitting the advance return for tax on sales and purchases for deferred taxes (short: advance VAT return), entrepreneurs have to ensure that the tax office is informed of whether
(a) the advance VAT return may be processed in a FULLY AUTOMATED way OR;
(b) a FINANCIAL OFFICER should give the set of facts special attention.
The responsibility (liability) for the making of this distinction in the processing of the advance VAT return – and for all legal consequences – is now with the entrepreneur (not with the tax accountant!). If the tax office's attention is not drawn to the fact that the advance VAT return has to be examined separately, this might result in legal proceedings and criminal consequences, such as TAX EVASION and TAX FRAUD.
As a general rule, the advance VAT return should be examined by a financial officer if it should constitute a SPECIAL CASE, that is to say, if the facts have a peculiarity which could lead to different legal opinions.
In the event of a possible special case, the entrepreneur has to ensure that in the advance VAT return form in LINE 75 the CODE NUMBER 23 is checked and the necessary information is entered in the field for additional explanations (optional!). The accounting software cannot basically make this distinction. If not sufficient, more detail and particulars may be sent in a separate letter to the tax office, if necessary, with the accompanying documents.