Tax audit (Betriebsprüfung) for the self-employed and small businesses in Germany

What is a tax audit (Betriebsprüfung)?

The tax audit (Betriebsprüfung) – officially an external audit (Außenprüfung, §§ 193 ff. AO) – is a review of your tax affairs directly at your business. Tax office auditors look at receipts, entries and contracts and compare them with your returns. It is permitted for everyone who runs a trade, agricultural or forestry business or works as a freelancer – including sole traders and people self-employed alongside a job.

As a rule, income tax (with the profit calculation), VAT (Umsatzsteuer) and trade tax (Gewerbesteuer) are audited. An audit is not a suspicion of tax evasion: micro businesses are often selected at random, by sector focus or because of anomalies.

Size classes: how likely is an audit?

Every three years the tax office assigns each business to a size class (Größenklasse). Turnover or taxable profit is decisive; if either figure exceeds the threshold, the business belongs to the higher class. A business below both thresholds for small businesses is a micro business. The thresholds have applied since 2024; from 2027 only the values for large businesses rise.

Audit rate by size class

Large businesses are audited almost without gaps; for micro businesses an audit is the exception. Based on the 2024 rate, a micro business would only be audited about every 140 years – in practice, however, selection focuses on cases with risk indicators. In total, the federal states audited around 140,000 businesses in 2024 and found additional revenue of about €10.9 billion.

What increases the likelihood: strongly fluctuating or permanently low profits, losses over several years, high input VAT refunds, a lot of cash, deviations from sector benchmarks (Richtsätze), a company car with a low private share, control notifications from the audit of a business partner, the sale or closure of the business.

How a tax audit works, step by step

Small businesses are usually audited for the last three years for which returns have been filed (§ 4 Abs. 3 BpO). The audit takes place at your business premises; if there are none, at your home or at the tax office – for small businesses an audit at the tax office is common. Since 2025 auditors are supposed to offer interim meetings so that you learn early where they see findings.

• Audit order (Prüfungsanordnung): in writing, with the audit period, types of tax and start date; for small businesses usually two weeks in advance (§ 5 Abs. 4 BpO). You can apply for a postponement for an important reason.
• From notification onwards, a voluntary disclosure with exemption from penalty (strafbefreiende Selbstanzeige) is blocked for the audited taxes and years – so if you know about errors, discuss them with your tax advisor as early as possible.
• Initial meeting and data access: you name a contact person, provide receipts and data and answer questions.
• Audit: individual receipts, account reconciliations, plausibility checks (e.g. cash-flow analysis, recalculation), questions via auditor requests.
• Final meeting (Schlussbesprechung, § 201 AO): the findings are explained; there is often still room for negotiation here.
• Audit report (Prüfungsbericht, § 202 AO): on request you receive it in advance and can comment within a deadline.
• Amended assessments: with additional payments, interest under § 233a AO and usually removal of the reservation of review (Vorbehalt der Nachprüfung). You can file an objection (Einspruch) against them.

Data access Z1, Z2, Z3 and GoBD

If you keep your books electronically, the auditor may access the data (§ 147 Abs. 6 AO). She chooses which form to use – even several in succession. The data must be machine-readable; a PDF printout of the entries is not enough. What the records need to look like is explained in the guide GoBD explained simply.

The auditor also frequently requests a procedural documentation (Verfahrensdokumentation): a description of how receipts reach you and are recorded, booked and archived. For sole traders a few pages are often enough.

VAT spot check and cash register spot check

Besides the announced audit there are two unannounced checks. For the VAT spot check (Umsatzsteuer-Nachschau, § 27b UStG) an official comes by during business hours and checks individual VAT matters – typically after a new business start with high input VAT refunds, or to see whether a business actually exists. In the cash register spot check (Kassennachschau, § 146b AO) the till, cash records and, where applicable, the TSE (technical security device) are checked; it also covers open cash boxes (offene Ladenkassen).

Neither spot check is an external audit, but both can turn into one without an audit order. Keep your cash book (Kassenbuch) and receipts so that you can present them immediately.

Typical focus areas for the self-employed

For small businesses, auditors focus on areas where private and business matters are close together and mistakes are common:

Preparation: checklist and worked example

Most additional payments are not caused by fraud but by formal errors. An example: for a graphic designer, an auditor disallows €600 of business meals without participant details for three years (profit +€420 per year, because only 70 % had been deducted), increases the private share of the car by €1,800 per year and denies €380 of input VAT from an invoice without a tax number. Result: around €6,700 more profit over three years, at a 35 % marginal tax rate about €2,330 of income tax, plus €380 VAT and interest. With clean receipts almost none of this would have arisen.

• Receipts complete and organised: keep accounting vouchers for 8 years, books and records for 10 years.
• Bank and cash accounts reconciled with the bookkeeping, private withdrawals and contributions traceable.
• Check the logbook, business meal receipts and contracts for gaps in advance.
• Test the data export and have the procedural documentation ready.
• Name a contact person and give answers only in writing and after consultation.
• Discuss errors you discover yourself with your tax advisor – a correction before the audit order is much better than after it.

Consequences and duty to cooperate

If the audit results in additional tax, the tax office issues amended assessments; interest of 0.15 % per month is charged on the additional payments (see interest and surcharges). If the books are not properly kept, it may estimate profits (§ 162 AO) and add safety margins. If tax evasion is suspected, the audit is interrupted and the department for fines and criminal tax matters (Bußgeld- und Strafsachenstelle) is involved.

You must cooperate: provide information, present documents, enable data access (§ 200 AO). For taxes arising after 2024, the tax office can impose a delay penalty (Mitwirkungsverzögerungsgeld) of €75 per day, for at most 150 days, if you delay after a qualified request to cooperate (§ 200a AO).

Preparing for a tax audit with KontoVexa

KontoVexa archives your receipts in line with GoBD and unalterably for ten years and links them to expenses, invoices and journal entries. The audit log shows who changed which record and when; entries are not deleted but reversed. You export reports and the cash book as CSV or XLSX, and on the Business and Pro plans your tax advisor gets their own access free of charge.

You can find more on storing receipts on the page archiving receipts. KontoVexa does not offer a special auditor access or an export in the tax administration’s format – it is best to agree in advance with the auditor or your tax advisor which form of data handover is sufficient.

Frequently asked questions