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Background: Taxpayers who calculate their profit by means of a cash-basis income statement (Einnahmen-Überschussrechnung) under § 4 (3) EStG are generally not required to keep cash books.
However, please note: business revenue must nevertheless be verifiable by the tax office at any time as to completeness and accuracy. According to a recent (unpublished) decision of the BFH dated 13 March 2013 (X B 16/12, BFH NV 2013, 902), taxpayers who document their business revenue in cash reports must ensure that these are accurate and verifiable. If the reports have been repeatedly corrected and are internally inconsistent, the tax office is, according to the BFH, entitled to estimate the revenue. Only if the daily takings can be derived without contradiction from the documented opening and closing cash balances is the cash report deemed proper under the BFH ruling, in which case no estimate is made.
If you do not maintain appropriate records, auditors regularly add substantial revenue figures during tax audits.
Frequently asked questions
Frequently asked questions
Are taxpayers using cash-basis accounting required to keep a cash book?
Taxpayers who determine their profit by cash-basis accounting (Einnahmen-Überschussrechnung) under § 4 Abs. 3 EStG are generally not required to keep a cash book. Nevertheless, business income must remain fully and accurately traceable at all times and verifiable by the tax office. In practice, orderly documentation of cash receipts is therefore recommended.
When is the tax office allowed to estimate revenues?
According to the case law of the BFH (decision of 13 March 2013, Az. X B 16/12), the tax office is entitled to estimate business revenues if the cash reports have been repeatedly corrected or are internally inconsistent. An estimate also looms if no orderly records of cash receipts exist at all.
When is a cash book report considered proper?
According to the BFH, a cash book report is proper if the daily takings can be derived consistently from the documented opening and closing cash balances. The records must be accurate, complete, and verifiable. Where these requirements are met, an estimate by the tax office is not permissible.
What are the consequences of missing or deficient cash records?
If cash records are missing or inconsistent, tax audits regularly result in substantial additional estimates of revenue. These estimates lead to significant back taxes, including interest. Careful and coherent cash bookkeeping is therefore practically indispensable, even for businesses using the cash-basis accounting method (EÜR).