A tax audit is a systematic examination of a company's tax situation by the tax authorities (and as long as you're not Al Capone, all should be well, just to clarify...).
It serves to verify the accuracy and completeness of the tax information and compliance with the applicable tax laws. The audit may cover one or more tax periods and includes analysing accounting records, receipts and other relevant documents.
Tax audits can be carried out both announced and unannounced. The duration varies depending on the size of the company and the complexity of the matters to be audited, but can take several weeks or even months. During the audit, companies have a duty to co-operate and must grant the auditors access to all necessary documents and information.
The aim of the tax audit is to ensure correct taxation and uncover possible tax evasion. It also serves to ensure uniformity of taxation and to secure tax revenue. For companies, a tax audit can involve a considerable amount of time and resources.
Good preparation and proper bookkeeping can make the audit process easier and minimise potential complaints.
Key Takeaways
- A tax audit is a review of a company's tax situation by the tax office.
- Tax audits are carried out by specially trained auditors from the tax office.
- Documents such as accounting records, invoices and contracts are required for a tax audit.
- A tax audit can lead to additional tax payments and fines.
- To prepare for a tax audit, it is important to keep and store all relevant documents properly.
Who carries out tax audits?
Company audits at a glance
Tax audits are usually carried out by specially trained tax auditors from the tax office. These auditors have extensive training in the field of tax auditing and have the necessary expertise to review a company's tax situation.
Tasks and powers of the tax auditor
The tax auditors are independent and neutral and have the task of checking the company's tax information for accuracy and completeness. The tax auditors have the right to inspect all necessary documents and Data of the company and review them. They can also question company employees and obtain a comprehensive overview of the company's tax situation.
Cooperation between auditors and companies
The auditors work closely with the company to obtain all the necessary information and organise the audit process as efficiently as possible.
Objectives of the tax audit
Overall, the tax office's auditors are responsible for ensuring compliance with tax regulations and that the company fulfils its tax obligations properly.
How does a tax audit work?
A tax audit usually takes place in several stages. Firstly, the tax office announces the tax audit and sets a date for the start of the audit. During the audit, the tax office's auditors will review various documents and data from the company to ensure that the tax information is correct.
This includes accounting documents, advance VAT returns, payroll documents and other relevant documents. Documents. The auditors have the right to inspect all necessary information and documents and may also question company employees. Once the audit is complete, the auditors prepare an audit report in which they summarise their findings and results.
This report is made available to the company and serves as the basis for any subsequent tax payments or refunds. Overall, a tax audit is an intensive process that requires close cooperation between the company and the tax office.
What documents are required for a tax audit?
| Documents | Description of the |
|---|---|
| Trading books | All trading books, such as general ledger, subsidiary ledgers, inventory books, etc. |
| Annual financial statements | All annual financial statements for the past few years, including Balance sheet and Profit and loss account. |
| Tax returns | All tax returns from recent years, including advance VAT returns and income tax returns. |
| Contracts | All contracts, such as rental agreements, employment contracts, supply contracts, etc. |
| Receipts | All supporting documents, such as invoices, receipts, bank statements, etc. |
During a tax audit, various company documents and data are required in order to verify the tax information. These include the accounting documents, such as account management, cash books, invoices and receipts as well as the annual financial statements. In addition, the advance VAT returns, payroll records, contracts and other relevant documents are also checked.
It is important that the company has all the necessary documents and data ready to make the audit process as smooth as possible. Careful preparation for the audit is therefore essential to ensure that all relevant information is available. In addition, it is important that the company works closely with the auditors during the audit and provides all the necessary information.
What consequences can a tax audit have?
A tax audit can have various consequences for a company. If it is established during the audit that the company has not properly fulfilled its tax obligations, this can lead to additional tax payments. In addition, sanctions such as fines or interest may also be imposed.
In the worst case, a tax audit can also lead to criminal prosecution if tax evasion or other criminal offences are discovered. It is therefore important that companies prepare for a tax audit and ensure that their tax information is correct and complete. Careful bookkeeping and documentation of all tax-relevant transactions is therefore essential in order to avoid the possible consequences of a tax audit.
Overall, a tax audit can be very stressful for a company and should therefore be taken seriously.
How can you prepare for a tax audit?
Preparation of the required documents
In addition, it is important that the company carefully checks its tax information and ensures that it is correct and complete.
Identifying and preparing for risks
It can also be helpful to consult a tax advisor or a specialist tax lawyer in good time to identify possible risks and prepare for the audit.
Goals of careful preparation
Careful preparation for the tax audit can help to avoid possible consequences and make the audit process as smooth as possible.
What are the rights and obligations during a tax audit?
During a tax audit, both the tax office and the audited company have certain rights and obligations. The tax office has the right to inspect and review all of the company's required documents and data. The tax auditors can also question company employees and obtain a comprehensive overview of the company's tax situation.
The audited company is obliged to provide all necessary documents and data and to support the audit process. It is important that the company co-operates closely with the auditors and provides all necessary information. In addition, the company has the right to seek advice from a tax consultant or a specialised tax lawyer and to identify potential risks.
Overall, it is important that both the tax office and the audited company know and respect their rights and obligations during a tax audit. Close co-operation between the company and the tax office can help to make the audit process as efficient as possible and avoid possible consequences.
