Even small and mid-sized companies benefit from the simplified input tax deduction from electronic invoices. However, many still have legal doubts about the destruction of original documents. That is not necessary, because the legislation has now sounded the all-clear even for customs documents.

A digital signature has no longer been mandatory on electronic invoices for the right to input tax deductions since mid-2011. Since the automated processing of incoming documents also reduces costs and helps accelerate business processes, more and more companies, following initial hesitation, are doing away with sending paper invoices.

Naturally, the integrity and authenticity of all invoices transmitted as web download, as part of an electronic data interchange (EDI), or as an e-mail attachment, for example, must still be guaranteed for tax purposes now and in the future. For this, the German value-added tax law requires the use of in-house procedures for matching incoming invoices with payment obligations. This sounds a lot more complicated than it is in practice because, doubtlessly, it has always been in any company’s best interest to check if an incoming invoice is correct in terms of the type and volume of delivery/service provided and the information included, and to pay only invoices which they are actually obligated to settle. It does not matter here if this happens with computer assistance as part of a correspondingly set-up accounting system, or – as is still common and legally permissible with smaller companies – through the manual comparison of the invoice with available business documents, such as a copy of the order, request, sales contract, delivery note, or bank transfer or payment document.

Replacement scanning

Because tax authorities strictly reject the sole retention of electronic incoming invoices as paper printouts, no company will be able to avoid storing all electronically received invoices in their original format. In return, the rather liberal German retention obligations in the international sector have allowed the destruction of original paper documents after digitization for years. Tax authorities have once again affirmed the legality of such “replacement scanning” in their GoBD dated November 14, 2014. Paper documents may be digitized and then destroyed even for exercising the right to input tax deductions, as long as compliance with the company-specific regulations for unchanged and proper digitization process documentation, which is in any case prescribed for company IT systems, is ensured. Color reproduction is only required if the color has an evidential value (e.g. deficits in red, endorsements, processing notes and mark-ups in various colors). The few exceptions – not only for taxes – include

 

  • Certified or notarized documents, powers of attorney, paper documents with signature: The (paper) original has a higher evidentiary value (§§ 415 ff. of the German Code of Civil Procedure – ZPO). The scanned version constitutes prima facie evidence (§ 299a ZPO).
  • Acknowledgments of debt, acceptances of debt, certificates of bond: In these cases, it could be assumed from their destruction that they have been declared invalid.
  • Certificates of inheritance, promissory notes, bills of exchange: An obligation to return exists in these cases.
  • Electronic input tax reimbursement: While invoices and import documents are to be included electronically via the online portal of the German Federal Central Tax Office, in cases of “reasonable doubt” in the reimbursement claim the presentation of the original (paper) documents may be demanded.

 

Nevertheless, paper documents which have already been scanned are frequently retained in practice, even though companies could benefit from the elimination of the retention costs. Uncertainty about the acceptance of the process documentation and thus the entire scanning process by the tax authorities is usually given as the reason for this. Relief can be obtained here from the sample process documentation for digitization and electronic storage of documents, including the destruction of paper documents, developed jointly by the Bundessteuerberaterkammer (German Federal Chamber of Tax Consultants; BStBK) and the Deutscher Steuerberaterverband e.V. (German Tax Consultant Association; DStV). It includes premade formulas for organizing and documenting the handling of digitized documents. The sample process documentation can also be found on the website http://www.gobd.de, where experts also answer questions about the mobile scanning of documents by field service employees or external staff, for example. In this context it should be ensured that

  • only the employee has access to the mobile device and authorization to scan,
  • the scanned documents are transmitted to the company unchanged and in their entirety,
  • the remotely recorded documents are properly and promptly saved, and last but not least
  • the remotely recorded documents cannot be lost.

Even small and mid-sized companies benefit from the simplified input tax deduction from electronic invoices. However, many still have legal doubts about the destruction of original documents. That is not necessary, because the legislation has now sounded the all-clear even for customs documents.

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Questions regarding customs documents

There is a great deal of uncertainty about whether or not customs documents may also be scanned and destroyed. After all, according to the wording of the German Tax Code (Abgabenordnung; AO), all documentation which the customs authorities forego in the submission of the customs declaration or which they have returned after presentation must to date be stored in the original form. This confusion has now ended. Due to a revision of the tax rules for the storage of documentation regarding tax and customs law (§ 147 Para. 1 No. 4a and Para. 2 AO), since May 1, 2016, even documents digitized in accordance with the EU Customs Code may be stored on data media. At least, as long as the applicable bookkeeping rules are maintained and the documents and records are available at any time during the entire retention period, and can promptly be rendered readable and evaluated by machine. Exceptions apply only for official documents and unofficial proofs of preference which must be signed by hand.

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About Bernhard Lindgens
At the Federal Central Tax Office, Bernhard Lindgens is primarily responsible for combating fraud and works as a specialist author in the fields of tax law, accounting and tax compliance for Handelsblatt Fachmedien, among others.
Bernhard Lindgens

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