As a self-employed business owner you may get audited by the Finanzamt (Financial authorities) from time to time.
Staying organised is the key to succeed in a tax audit and avoid any unpleasant surprises.
Which documents will I need to provide during a tax audit?
The Finanzamt will review your tax declarations and request to see relevant proof for your income and expenses.
Keeping your invoices and receipts will help you to prove that you declared your income and expenses correctly.
In addition to invoices and receipts, you should also keep any supporting documents that prove your income or expense were work related. For example, when going on a business trip, it is recommended to keep track of arrangements with clients, travel itineraries, etc.
Would I need to attach the invoices when submitting my tax reports?
When you send your tax reports to the Finanzamt, you don't need to include your invoices. Each report is a summarised view of a specific type of tax that you need to pay. If the Finanzamt notice anything unusual in your tax reports, they may ask you to send clarifying documents.
Do I need to keep the original invoices and receipts?
The Finanzamt may perform a tax audit as far as 10 years back, so you should keep your original documents for up to 10 years.
Tax auditors are likely to ask for the original documents. You should keep any paper documents in their original physical form, and digital documents in their original electronic form.
It is a good practice to consolidate all your documents into one document archive, physical or digital, but you should still keep the original documents for future tax audits.
What should I do if I lost my invoice?
There are times when it is just not possible to get a legally correct invoice. For example, you lost an expense invoice and there is no way for you to get in touch with the supplier.
In cases like this you can still document the expense by creating a self created receipt (Eigenbeleg). The receipt is a valid proof to deduct your expenses when calculating your profit for the income tax, but it is not valid as a proof for VAT tax deductions.
You should try to keep the number of self created receipts as low as possible, and avoid using them for high amount expenses. Using them frequently will raise the suspicion of the auditor that the bookkeeping was done poorly.
Which details should be on the self created receipt (Eigenbeleg)?
A correct self created receipt must contain the following information:
- Full name and address of the supplier
- Type of expense, for example: "Train ticket XY",
- Date of the expense
- Costs (total price, unit price if applicable),
- Proof of the price (using a bank account statement or the price list of the supplier)
- Reason for not having the original receipt (e.g. loss, theft or "unacknowledged tip")
- Issue date and your signature
Sorted tax guides are provided without liability and do not replace a tax advisor.
To get an accurate answer for your specific case, please consult a tax advisor.
You can always ask one of tax advisors on the Sorted platform.
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