In tax law, a four-year assessment period applies. However, the expiration of this period can be suspended by an external audit, as shown by a judgment of the FG Düsseldorf on July 8, 2022 (Case No. 1 K 472/22 U).
An audit is time-consuming for companies and can end with high back payments. However, it should be noted that in tax law, a four-year assessment period applies. After the submission year has elapsed, changes to tax assessments are possible for another four years. The assessment period can be suspended if the tax authority orders an audit just before the expiration and carries out initial audit actions in time, explains the business law firm MTR Legal Rechtsanwälte, which specializes in tax law.
The Düsseldorf Fiscal Court had to decide whether the assessment period for VAT 2015 was suspended by an extension of the external audit and the request for documents. The plaintiff in the underlying case was a GmbH, which had submitted its VAT return for the year 2015 in the summer of 2016 and to which the tax office had given conditional approval. The four-year assessment period had thus expired at the end of 2020.
In December 2020, the tax office began an audit for VAT from 2016 to 2018. In a letter dated December 15, 2020, the auditor extended the audit period to 2015 VAT and requested various documents for 2015 from the GmbH.
The completion of the audit resulted in a significant VAT back payment for 2015. The company objected, arguing that the regular assessment period for VAT expired on December 31, 2020. Since it was not discernible that the audit for 2015 had begun in 2020, the course of the period had not been suspended.
The GmbH did not succeed with this argumentation at the Düsseldorf Fiscal Court. Although the regular assessment period for the year 2015 generally ended at the end of 2020, the period’s course was suspended by the external audit initiated for 2015 still in December 2020. The documents’ request constituted a recognizable audit action and not just a mere preparatory action, according to the court.
The law firm MTR Legal Rechtsanwälte provides its clients with experienced lawyers in tax law during an audit.
