Enable an end-to-end digital tax assessment process
Companies have long submitted their tax returns electronically. However, tax assessment notices are, as a rule, still generally sent to companies by the tax authorities on paper. Such breaks between digital and paper-based processes are prone to error and no longer fit for purpose. By contrast, an end-to-end digital tax assessment process makes procedures more efficient for both companies and the tax authorities.
Fully digital tax assessment notices must become the norm, especially since the legal basis for them has existed since 2017. It is not sufficient merely to make a paper notice available for download in electronic form, for example as a PDF. The notice must also be produced in a structured, machine-readable format. The objective must be to provide a legally binding tax assessment notice as a PDF document together with a structured and standardised XML data record. This would allow the data in the tax assessment notice to be compared automatically with the data in the electronic tax return. Breaks between digital and paper-based processes, as well as the time-consuming manual entry of data from paper notices, would thus become a thing of the past.
Flagship Project “Digital Trade Tax Assessment”
The “Digital Trade Tax Assessment” project provides a model for other taxes. In spring 2023, the digital trade tax assessment notice was successfully integrated into ELSTER, the tax administration’s online portal. Since then, businesses and tax advisory firms have been able to indicate when submitting a trade tax return that they wish to receive the corresponding assessment notice digitally. The digital trade tax assessment notice, which is a legally binding notice provided as a PDF document together with a structured and standardised XML data record, marks an important step towards the further digitalisation of tax procedures.
Paper-based trade tax assessment notices should be phased out as soon as possible. Across Germany, these notices currently exist in around 600 different formats, creating numerous practical problems for businesses. In particular, companies are required to capture the data from the notices manually and digitise them through time-consuming processes, for example by using scanning stations. This is costly and prone to error. Companies with permanent establishments in several municipalities are particularly affected because they receive trade tax assessment notices with different structures.
Digital trade tax assessment notices also offer substantial efficiency gains for municipalities. Producing and transmitting the notices digitally streamlines internal administrative processes and saves several million sheets of paper each year. This is also an important consideration from the perspective of resource conservation and sustainability.
In addition, a trade tax clearing house should be established to reduce the considerable administrative burden associated with the apportionment of trade tax. This would significantly ease the burden on companies with permanent establishments in several municipalities, as they would have a single point of contact instead of having to deal with multiple municipalities.
Avoid requesting the same data from taxpayers more than once
Taxpayers should not be required to provide data that is already available to public authorities. Property tax is a good example. The announced technical integration of tax administration data with data held by other public authorities, primarily cadastral, surveying and land registry offices, should be implemented swiftly so that less information needs to be requested from taxpayers. Furthermore, the reform of property tax at state and municipal level must be accompanied by a drive towards digitalisation. Electronic tax returns and notifications submitted by taxpayers must be followed by the digital provision of structured tax assessment notices by both the tax administration and local authorities.
Detailed information on the digital trade tax assessment notice