In recent times, the DStV has repeatedly voiced criticism to the BMF regarding the recording of EC card transactions in the cash book. The BMF has now clarified its legal position from 16 August 2017 in a letter dated 29 June 2018, providing guidance for practical application:
"…The recording of EC card transactions in the cash book constitutes a formal defect, both in the past and in the future, since only cash movements are to be recorded in the cash book. The purpose of a cash book is to document the current cash balance of the till.
The cash book is intended to provide an overview of the taxpayer's cash holdings. For this purpose, it must be designed in such a way that the target balance can be compared with the actual balance at any time, thereby ensuring the ability to perform a cash count (Kassensturzfähigkeit) at any time. As already stated in the letter of 16 August 2017, the subsequent tax assessment of the matter depends on the individual case. If the EC card transactions originally recorded in the cash book are, for example, separately identified in a further step or even removed from the cash book and transferred to a separate account, then – although the EC card transactions initially incorrectly entered in the cash book continue to represent a formal defect – the ability to perform a cash count remains in place.
The (at least temporary) recording of EC card transactions in the cash book is a formal defect which, when weighing further formal defects in view of a potential rejection of the bookkeeping pursuant to § 158 AO, generally remains disregarded. The prerequisite is that the payment route is sufficiently documented and that the verifiability of the actual cash balance is ensured at all times. …"
For questions and the implementation in your specific case, please contact your accounting department or your Steuerberater (German Certified Tax Advisor) directly.
We have attached both BMF letters to this article:
Frequently asked questions
Frequently asked questions
Is it permissible to record EC card transactions in the cash book?
No. According to the BMF letter dated 29 June 2018, recording EC card transactions in the cash book constitutes a formal deficiency. The cash book may only contain cash transactions, as it serves to document the current cash balance. This applies both retroactively and going forward.
What is the purpose of the cash book according to the BMF?
The cash book serves to document the current cash balance. It must be maintained in such a way that the target balance can be reconciled with the actual balance at any time, ensuring the so-called cash audit capability (Kassensturzfähigkeit).
Does recording card payments in the cash book invalidate the bookkeeping?
Generally not. When weighing further deficiencies in view of a potential rejection of the bookkeeping under § 158 AO, this formal defect is regularly disregarded. The prerequisite is that the payment process is sufficiently documented and the verifiability of the actual cash balance remains ensured at all times.
How can EC card transactions be properly corrected after the fact?
If EC card transactions were initially recorded in the cash book, they can subsequently be flagged separately or transferred to a separate account. Although the formal deficiency remains, this preserves the ability to perform a cash count reconciliation (Kassensturzfähigkeit).
What conditions must be met for the formal defect to remain without consequences?
The payment flow of EC card transactions must be sufficiently documented, and the actual cash balance must be verifiable at any time. Only under these conditions is the formal defect disregarded in the event of a potential rejection of the accounting records.