Cash register inspection – How do I end up on the radar of the tax authorities?

With the Act on the Protection Against Manipulation of Digital Basic Records, tax authorities have been granted the right, from 2018 onwards, to carry out unannounced inspections in cash-intensive businesses. These inspections are intended to prevent the manipulation of cash register data and to ensure the proper recording of cash transactions. However, the Act grants tax authorities far-reaching powers and is aimed in particular at the hospitality sector.

But why me?
This is a question many restaurant owners have likely asked themselves after receiving an unexpected visit from a tax officer during normal business hours.

Targeted audit approaches

The issue of staff shortages is widely discussed, and tax authorities are increasingly affected by it as well. As a result, they aim to identify suspicious businesses through low-bureaucracy methods (without formal notice) and to carry out targeted audit interventions. Tax authorities frequently use cash register inspections as a preparatory step for an upcoming external audit. The inspection is intended to serve as an indicator of whether a cash-intensive business warrants a full audit.

It is not uncommon for a so-called test purchase to be carried out beforehand. This means that tax officers visit the establishment undercover and later check, during the evaluation, whether the revenue from the test purchase was recorded in the cash register and whether it was not subsequently cancelled. In addition, a tax officer’s private visit to a restaurant can also trigger an inspection.

But how does a trained eye within the tax office identify such irregularities? An interim bill being handed out, missing receipts, incorrect information about the business owner, incorrect VAT rates shown, or an inaccurately recorded method of payment – all of these can already be indicators that the cash register is not being operated in a proper and compliant manner.

TSE – Better late than never

Since 2023 at the latest, all electronic recording systems and digital records must be protected by a certified technical security system (TSE). As a result, tax authorities are increasingly carrying out spot checks to verify the proper use of the TSE. Deficiencies can be identified very easily by examining a receipt issued by the business, and they can quickly lead to a formal audit intervention.

Cash register reporting – no hidden motives?

In addition to internal irregularities, the use of external factors as a basis for initiating a cash register inspection is not ruled out. For example, incorrect programming within the cash register system may trigger an inspection. This type of audit intervention is likely to become more frequent in future due to the mandatory reporting of the cash register system used.

Practical recommendations in preparation for a cash register inspection

1. Choose your cash register system carefully:
   Use cash register systems that are recognised and proven in practice. Ensure that you have a dedicated contact person. Also make sure that your system is protected by a TSE.
2. Immediate recording of all transactions:
   Ensure that all orders and payments are recorded immediately and without gaps in the cash register system. Document any cancellations made.
3. Receipt contents:
   Ensure that all mandatory information is correctly shown on receipts (e.g. general business details, date, quantity and type of items sold, VAT rates, method of payment, TSE information).
4. Receipt issuance obligation:
   Offer every customer a receipt (as a QR code, by email or as a paper receipt). Even if the customer declines the receipt, do not suppress the issuance of the receipt in the system.
5. Review your tax assessment notice:
   When receiving your income tax or corporation tax assessment (for small and medium-sized businesses), check whether it has been issued “subject to review” in accordance with section 164 of the German Fiscal Code (AO). Such a reservation may indicate that an external audit could be forthcoming.

Conclusion: Pretention rather than cure

The cash register inspection is a powerful tool used by the tax authorities to uncover irregularities in cash register management.

Irregularities and deficiencies identified during the inspection do not immediately lead to estimates being made due to improper bookkeeping. However, if there is a justified suspicion, they authorise the tax audit department under section 146b (3) of the German Fiscal Code (AO) to proceed directly to a full external audit without prior audit notice. In the course of this external audit, findings from the cash register inspection may be used for the audit period concerned. If proper record-keeping is deemed not to be fulfilled, the tax auditors are obliged to estimate the taxable bases.

In addition to the possibility of an immediate transition to a full external audit, the appearance of a tax officer to carry out a cash register inspection triggers a blocking effect under section 371 (2) no. 1(e) AO with regard to the submission of an effective voluntary self-disclosure. As a result, from that moment onwards, criminal immunity can no longer be obtained.

This highlights all the more how essential it is to identify risk areas and audit indicators. With appropriate precautionary measures, the risk of a cash register inspection can be reduced to a minimum.

If you have any questions or require advice, please feel free to contact us.