A greater risk for companies: VAT calls for closer attention
Companies with activities in Germany need to be particularly attentive in managing their VAT: current figures from the German tax authorities show that in 2024 alone special VAT audits led to additional tax of EUR 1.63 billion.
What a special VAT audit is
Where a tax office suspects that a company is not accounting for its VAT properly, it can order a special VAT audit — a targeted examination confined to VAT.
Unlike a general tax audit, this measure is faster and more focused, and it can affect companies of any size and in any sector.
The purpose of these audits is to identify irregularities or errors in the advance VAT returns early on — in particular:
- input VAT deducted without entitlement
- turnover not declared, or declared incorrectly
- invoices that are incorrect or incomplete
The figures for 2024
The official figures from the German tax authorities speak plainly:
- 733 special audits were carried out in 2024
- 630 auditors were deployed — an average of 39 audits each
- each auditor produced additional tax of EUR 1 million on average
- EUR 1.63 billion in additional tax was assessed in total
What does that mean in practice? These amounts do not come from penalties but from VAT assessed after the event because of errors or omissions found in the companies’ returns.
The most common causes
- errors in charging VAT or in deducting input VAT
- missing or inadequate evidence
- formal defects in invoices (missing mandatory details, format problems)
- incorrect treatment of cross-border supplies (intra-Community supplies, exports and so on)
Who is particularly affected
These developments concern above all:
- French companies with a subsidiary, a permanent establishment or taxable activity in Germany
- companies liable to VAT in Germany (in e-commerce, for instance, or in cross-border services or supplies within the EU)
What the risks are in practice
- substantial back payments of tax (VAT plus interest)
- refusal of the input VAT deduction where invoices are defective
- criminal exposure where tax evasion is suspected — including in cases of negligence
Recommended measures
We strongly advise the companies concerned to take the following steps:
- review the German VAT returns internally
- check the invoicing (mandatory details, cross-border situations, exemptions and so on)
- introduce regular internal controls, particularly on the accuracy of the amounts declared
- reconcile the accounting records with the advance VAT returns
- archive all vouchers and supporting evidence properly