New Reporting Requirements Under Section 5b(1) of the Income Tax Act: Implications and Challenges for Businesses

The 2024 Annual Tax Act introduces new reporting requirements for taxpayers. For fiscal years beginning on or after December 31, 2024, the tax authorities will now require the submission of account statements in addition to the standard electronic balance sheet. It should be noted that the tax e-balance sheet provides significantly greater detail than the annual financial statements required under commercial law, which must be filed with the commercial register.

For fiscal years beginning after December 31, 2027, additional documents will be required: the statement of changes in fixed assets, the fixed asset register, and—if available—the notes to the financial statements, the management report, and the audit report. In addition, the schedules pursuant to Section 5(1), Sentence 2 of the Income Tax Act (EStG) and Section 5a(4) of the Income Tax Act (EStG) must be submitted. All documents must be submitted electronically using an officially prescribed data record.

Uncertainties Regarding the New Submission Requirements

There are currently still significant uncertainties regarding the exact requirements for data transmission. For example, it remains unclear whether existing PDF files, such as audit reports, are sufficient or whether the tax authorities will require specific data formats, similar to the e-balance sheet. Furthermore, it is disputed whether the tax authorities are authorized to request audit reports from voluntary annual financial statement audits. It is also unclear whether the required information is limited to the data to be disclosed under Section 326 of the German Commercial Code (HGB) or whether internally used appendices containing more detailed information must also be submitted.

Position of the German Association of Tax Advisors (DStV)

The German Association of Tax Advisors (DStV) expressed concerns to the Federal Ministry of Finance (BMF). The Ministry subsequently clarified that only the account statements for general ledger accounts—including account number, account description, account balance, and their allocation to the items in the e-balance sheet—need to be submitted. However, due to the more detailed structure of the tax e-balance sheet, this means that account statements must be adapted to the e-balance sheet even if a standard balance sheet has been prepared. Accounts from subsidiary ledgers, such as personal accounts, are expressly exempt from this requirement.

Increasing Administrative Burden for Taxpayers

The newly introduced reporting requirements significantly increase the bureaucratic burden on companies and their tax advisors without any discernible added value for the tax assessment process. Although the data to be transmitted generally does not constitute personal data under the GDPR, the expansion of reporting obligations contradicts the principle of data minimization. The legislature should therefore critically reconsider the planned revision of Section 5b of the Income Tax Act (EStG).

Contrary to political promises to reduce bureaucracy, this measure creates additional burdens that are unlikely to improve the quality of tax assessments or lead to simplification. Rather, it is likely that the tax authorities will either disregard the additional documents submitted or that these could even give rise to avoidable follow-up inquiries.

If you, too, are seeking assistance in navigating the maze of reporting requirements, our team of tax advisors in Düsseldorf and Oberhausen is always happy to assist you. Contact us for a consultation.