Social security audit and external wage tax audit – what to watch out for in the future?

As part of the irregularly scheduled external wage tax audit, checks are made to see whether employers are properly paying wage tax for their employees. During the social security audit, the German Pension Insurance checks every four years, among other things, whether social security contributions have been correctly paid.

Our experience shows: The auditors are looking ever more closely and demanding more information or evidence.

What do you need to keep in mind? Practical tips.

Social security audit and external wage tax audit in the focus

External wage tax audit – audit period is the last 4 years

The main focus of the audit is to check the financial accounting and the wage and salary accounts for content that is incorrect or has not been taxed.

Specifically, the following documents and records are requested:

• General ledger, payroll and salary accounts.
• Hourly records, hourly logs of all employees
• Cash book
• Payroll and financial accounting journals
• All documents of the vehicle fleet (leasing contracts, invoices car purchase)
• Fleet lists
• Invoices for company events including lists of participants
• Evidence of job tickets
• Invoices for gifts to employees and customers ( with information to whom the gifts went )
• Confirmation of vehicle delivery / vehicle return to lessor
• Addendum to the employment contract regarding changes in home/work trips when using a company car (for example, in the case of future home office activity); NOTE: Home/work trips may only be reduced or set to zero if the change in place of work is designed to be permanent. Sickness, vacation or short-time work do not count.
• Logbook for pool vehicles – here a logbook must always be kept.
• Driver’s logbook for the use of a company car, if the driver’s logbook method has been chosen.
• Invoices of all types of non-cash benefits to the employee
• Confirmation of 1st employment relationship Energy price flat rate (mini-jobber)
• Employment contracts & company agreements

Please note: All listed documents must be reported to the payroll department, if necessary by the financial accounting department. Only then can it be ensured that all taxable expenses are properly accounted for.

Social security audit by DRV – audit period is the last 4 years

The main focus of the audit is to verify that employees are subject to compulsory insurance, that all social insurance contributions have been properly reported, that accident insurance has been reported and that contributions have been submitted to the artists’ social insurance fund.

In particular, the following documents and records are requested:

• Applications for exemption from pension insurance in the case of mini-jobbers
• Hourly records, hourly logs of mini-jobbers
• Enrollment certificates of working students
• Information on freelancers (pseudo self-employment)
• Proof of internships (proof of university / school for mandatory internships)
• Proof of private health insurance for mini-jobbers
• Verification of professional status of short-term employees
• Status determination procedure for employment of family members and, if applicable, for salaried partners
• Please note: Within the scope of the social security check, G/L accounts from the financial accounting are also requested. As a rule, all documents and records requested for the external wage tax audit must also be submitted for the social security audit. Necessary documents must be forwarded by the financial accounting department to the payroll department. Only then can it be ensured that all expenses subject to social security contributions are properly taken into account.

Tip: Keep these documents separately so that you can present them promptly when requested by the auditor.