In tax law, a four-year assessment period applies. However, the expiration of this period can be suspended by an external audit, as a ruling by the Düsseldorf Fiscal Court on July 8, 2022, shows (Ref. 1 K 472/22 U).
A tax audit is time-consuming for businesses, and can ultimately result in high additional payments. However, it should be noted that in tax law a four-year assessment period applies. After the submission year, changes to tax assessments are thus possible for another four years. However, the assessment period can be suspended if the tax authority orders an audit shortly before the expiration and conducts initial audit activities in time, explains the economic law firm MTR Legal Rechtsanwälte, which focuses on tax law in its advisory services.
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 which the tax office had approved under reservation. Thus, the four-year assessment period had expired at the end of 2020.
The tax office began an audit in December 2020 for VAT of the years 2016 to 2018. In a letter dated December 15, 2020, the auditor extended the audit period to include VAT 2015 and requested various documents for 2015 from the GmbH.
The conclusion of the audit ultimately resulted in a significant VAT additional payment for 2015. The company opposed this and argued that the regular assessment period for VAT had expired on 12/31/2020. As it was not evident that the audit for 2015 had begun in 2020, the expiration of the period was not suspended.
With this argumentation, the GmbH did not succeed at the Düsseldorf Fiscal Court. Although the regular assessment period for the year 2015 had indeed ended with the end of 2020, the expiration of this period was suspended by the external audit initiated for 2015 still in December 2020. The request for documents constituted a recognizable audit action and not just a preparatory act, the court said.
The law firm MTR Legal Rechtsanwälte provides their clients with experienced lawyers for a tax audit.
