Data Protection at the Tax Office: What Does the Tax Authority Know About Taxpayers?

In today's society, data protection is becoming increasingly important. Many people are concerned about their personal data and want to disclose as little as possible. Of course, the tax office also maintains a corresponding database of information on every taxpayer. One might think that the government scrutinizes every taxpayer and stores as much information as possible to prevent tax fraud. But what does the tax authority actually know about taxpayers? In this article, as tax advisors in Düsseldorf and Oberhausen, we’d like to explain what data the tax office actually stores. We’ll also dispel the myth of total surveillance.

What information and data does the tax office want?

In general, the tax authorities need as much information as possible regarding income and assets. The more reliable information and data that can be collected, the easier it is to combat tax evasion. It’s important to note that the collected data doesn’t just help the tax authorities. Because much of the information about income and assets is transmitted automatically, taxpayers have less work to do. For example, if you file your tax return using the ELSTER program, the information already obtained by the tax office can be entered automatically. As a taxpayer, you simply need to verify the details. However, the tax authorities’ primary interest is, of course, to prevent tax fraud.

Examples of important information include:

• Amount of salary
• Amount of investment income
• How many accounts does the taxpayer have?
• Information on insurance premiums paid
• Dividends paid

Who provides the tax office with information and data?

To obtain the necessary information, the tax authorities rely on a variety of sources. An obvious source of information is you yourself, in your capacity as a taxpayer. Through the information you provide on forms and in your tax return, you supply a great deal of essential data. Of course, the tax office relies on taxpayers to provide only truthful information. To counteract this, the tax authorities have a broad network of cooperating agencies. The tax office receives data from the following sources:

• Employers
• Banks
• Health insurance
• Pension insurance
• Life insurance companies
• Local governments
• Government agencies
• Municipalities
• Federal Central Tax Office
• Employment agencies

The fact that employers report income and banks are required to disclose account information is relatively obvious. Other sources mentioned may come as a surprise to many people. For example, notaries are required to report information regarding real estate purchases. Purchase price, buyer, and seller are thus determined from a reliable source. In general, it can be said that any government agency, municipality, or institution is required to report if tax-relevant data is available.

How is the information transmitted to the tax office?

Digitalization has made many things easier. Of course, the tax authorities also use the fast exchange of data via the internet. Basic data, such as income or bank information, is now transmitted fully automatically. The tax identification number is used to facilitate the electronic retrieval of data from a wide variety of sources. Perhaps you have wondered why you were asked for your tax ID number during certain banking transactions or when signing contracts with health insurance providers. The tax ID number is used precisely to facilitate this electronic exchange of information.

Information that is not regularly transmitted (e.g., reports of tax evasion) is sent separately to the tax office and processed by the relevant staff.

As mentioned earlier, you can also submit information to the tax authorities digitally. With the ELSTER software, you can even benefit from data the tax office has already collected, reducing the amount you need to enter. It is important to note, however, that the tax authorities assume no liability for errors. It is therefore essential to carefully review all information.

Information Requirements vs. Data Protection

When considering how much information is collected by the tax office, it becomes clear that this would likely conflict significantly with applicable data protection standards in other areas of life. Of course, data protection also applies to the tax office.

It therefore remains the case that, as a taxpayer, you have a right to the protection of your data. Taxpayers can, for example, request information about which data is being accessed and stored. Additionally, you always have the option to report and correct incorrect data. You can obtain further information on data protection and your rights from the relevant tax office. Of course, a qualified tax advisor can also provide further information.

Tax Consulting from Experts in Düsseldorf and Oberhausen

When it comes to taxes, nothing should be left to chance. That is why consulting with a qualified tax advisor makes sense for most taxpayers. If you lack the necessary expertise or simply don’t feel like handling the bureaucratic work, we are the ideal partner for you. Our team of experienced tax professionals can assist with all tax-related matters. During a consultation, we’ll be happy to explain our services and work with you to determine what makes the most sense for your specific situation. Contact us to schedule an appointment.