Tax Advisor Explains: Retention Periods for Business Records
As an entrepreneur, you accumulate an ever-growing volume of business records over the course of your career. For many entrepreneurs, the term “business records” has an unpleasant connotation. Over time, a wide variety of documents relevant to the business accumulate in the course of business operations. The paper chaos and the vast amounts of forms, notices, and documents can quickly drive you to despair, especially since business records are subject to retention periods. In this article, as tax advisors in Düsseldorf and Oberhausen, we have summarized the most important guidelines for retention periods. At the end, you will find a comprehensive table listing all retention periods for the various documents.
General Legal Background
Every business owner is required by tax and commercial law to retain business records for a specific period of time. Depending on the type of document, records must be retained for either six or ten years.
Business records, inventories, annual financial statements, management reports, balance sheets, as well as the work instructions and other organizational documents necessary for their understanding, accounting vouchers, and documents pursuant to Article 15(1) and Article 163 of the Union Customs Code must generally be retained for ten years. Incoming and outgoing commercial and business correspondence and other documents relevant to taxation must be retained for six years.
However, it is possible that the aforementioned retention periods may be extended. After the regular retention period has expired, documents must be retained in particular if they are relevant to the following circumstances:
- an external audit that has begun
- provisional tax assessment
- pending criminal tax and administrative fine investigations
- pending or anticipated appeal proceedings resulting from an external audit
- Justification of the taxpayer’s applications
Special rules for invoices
As a business owner, you issue and receive various invoices. The retention requirement for invoices is specifically regulated in the Value-Added Tax Act. Accordingly, all invoices that you issue or receive as a business owner must be retained for ten years.
Personal documents
Documents from your private life, such as those needed for income-related expenses or special expenses, are not subject to any retention requirement. An exception applies to documents related to services performed on real property. These must be retained for two years. Another exception applies to taxpayers who earn more than €500,000 per year from surplus income (e.g., income from employment, capital assets, renting, and leasing). They must retain documents and records substantiating their income and income-related expenses for six years.
Note: Even if there is no legal obligation to retain documents, it may be advisable to keep important personal records so that you have evidence for tax-related matters in case of doubt.
In what form must business documents be retained?
Documents generally do not need to be kept in their original form. A digital copy of the business documents is perfectly sufficient. However, the principles of proper bookkeeping must always be observed. It must be ensured that the data is accessible at all times and that it matches the original documents.
Note: Please be aware that receipts printed on thermal paper may fade over time. We recommend making copies of these in case of an audit by the (tax) authorities and keeping them together with the original receipt.
Exceptions to this rule are annual financial statements, opening balance sheets, and customs documents pursuant to Article 15(1) and Article 163 of the Union Customs Code. These must be retained in their original form!
When does the retention period begin?
The retention obligation begins at the end of the calendar year in which the last entry was made in the document or the inventory, balance sheet, annual financial statements, or management report was prepared. For invoices, the retention period begins at the end of the calendar year in which the invoice was issued.
Retention Periods in Detail
Now that we have covered the basics, we would like to help you correctly classify specific documents. Below, we have therefore listed relevant business documents alphabetically and indicated the respective retention period for each. All information is provided without guarantee. You should always consult a qualified tax advisor to ensure compliance with the most current legal requirements!
A
Accounting documents (insofar as they are accounting vouchers) 10 years
Advance payments 10 years
Closing accounting documents 10 years
Closing accounts 10 years
Final invoices 10 years
Depreciation documents 10 years
Assignment declarations after completion 6 years
Letters of credit 6 years
File notes (insofar as they are accounting documents) 10 years
Health insurance enrollment, cancellation, and change of address notifications 6 years
Offers that led to an order 6 years
Notes to the financial statements (§ 264 HGB) 10 years
Fixed asset inventories 10 years
Fixed asset register 10 years
Fixed asset ledgers and files 10 years
Attendance lists (to the extent required for payroll accounting) 10 years
Work instructions for computerized accounting 10 years
Outgoing invoices 10 years
Field service statements 10 years
Payment vouchers 10 years
B
Bank documents 10 years
Bank guarantees (after contract expiration) 6 years
Social security contribution statements (to the extent
they serve as accounting documents) 10 years
Documents and other records relevant
for taxation, to the extent they serve an accounting function (open-item
accounting) 10 years
Document formats 10 years
Inventory adjustments 10 years
Inventory counts (inventory documents) 10 years
Inventory lists 10 years
Order and contract documents 6 years
Operating statement forms with supporting documents as
valuation documents 10 years
Operating cost statements 10 years
Tax audit reports 6 years
Valuation documents (to the extent they are accounting documents and
tax-relevant) 10 years
Entertainment expense documents (to the extent they are accounting vouchers) 10 years
Balance sheet books 10 years
Balance sheets (annual balance sheets) 10 years
Balance sheet accounts 10 years
Balance sheet documents 10 years
Gross revenue statements 6 years
Gross payroll lists 6 years
Accounting guidelines (for legally required
consolidated financial statements) 10 years
Posting instructions 10 years
Posting vouchers 10 years
Guarantee documents (after contract expiration) 6 years
D
Data carriers (of trading ledgers, inventories,
management reports, consolidated management reports/including the work instructions and organizational documents necessary
for
understanding) 10 years
Loan documents (after contract expiration) 6 years
Loan agreements (after contract expiration) 6 years
Standing order documents (after contract expiration) 10 years
Accounts receivable 10 years
List of accounts receivable, insofar as balance sheet documents 10 years
Custody account statements 10 years
E
Import documents 6 years
Data entry descriptions for computerized accounting 10 years
Incoming invoices 10 years
Cash flow statement 10 years
Deposit receipts 10 years
Opening balance sheets 10 years
F
Travel expense reimbursements 10 years
Error reports, error correction instructions for computerized accounting 10 years
Financial reports 6 years
Waybills 6 years
Exemption orders for investment income 6 years
G
Pay stubs/payroll records (insofar as they are balance sheet documents/accounting vouchers) 10 years
Payroll lists 10 years
Pay stubs 10 years
Pay advance accounts 10 years
Annual reports 10 years
Business letters (except invoices or credit notes) 6 years
Income statements (annual financial statements) 10 years
Land registry extracts 10 years
Land registries 10 years
Property inventories (insofar as inventory) 10 years
Credit notes 10 years
H
Commercial balance sheets 10 years
Business correspondence (except for invoices or credit notes) 6 years
Commercial ledgers 10 years
Commercial register extracts 6 years
Annual general meeting (including resolutions) 10 years
I
Inventories as balance sheet documents 10 years
Investment allowance documents 6 years
J
Annual financial statements 10 years
Notes to the annual financial statements 10 years
Journals for the general ledger and current accounts (insofar as
they are booking documents) 10 years
K
Cash
reports 10 years
Cash books, -sheets 10 years
Cash receipts 10 years
Chart of accounts 10 years
Account registers 10 years
Bank statements 10 years
General ledger books 10 years
Consolidated financial statements 10 years
Group management report 10 years
Loan documents (insofar as they are accounting documents) 10 years
L
Management reports (including for groups) 10 years
Inventory records 10 years
Delivery notes* expires upon
receipt/dispatch
of the invoice
Delivery notes (insofar as they are accounting documents) 10 years
Payroll documents 10 years
Payroll accounts 10 years
Payroll lists 10 years
Payroll tax documents 10 years
M
Magnetic tapes with accounting function 10 years
Payment demands 6 years
Reminders 6 years
Lease documents, insofar as they are accounting documents (10 years after contract expiration)
N
Post-calculations 10 years
Cash-on-delivery receipts 10 years
Subsidiary ledgers 10 years
Usable floor space calculations (if tax-relevant) 10 years
O
Order documents 6 years
Organizational documents and plans (for
statutorily required consolidated financial statements) 10 years
P
Lease documents, insofar as they are accounting vouchers (after
the end of the contract) 10 years
Price lists 6 years
Price lists (insofar as they are valuation documents) 10 years
Price agreements in the form of business letters 6 years
General meeting minutes 6 years
Commission statements with supporting documents 10 years
Court files after conclusion of proceedings 10 years
Audit reports (external auditors) 10 years
Audit reports (internal audit) 0 years
Q
Receipts (insofar as they are accounting documents) 10 years
R
Invoices 10 years
Invoices from non-business entities (for services related
to real estate) 2 years
Travel expense reports 10 years
Return receipts 6 years
S
General ledger accounts 10 years
Trial balances 10 years
Claims reports 6 years
Claims documents (if accounting vouchers) 10 years
Check and bill of exchange documents 6 years
Correspondence 6 years
Cash discount documents 10 years
Storage allocation plan for computerized accounting 10 years
Donation receipts 10 years
Tax returns/tax assessment notices 10 years
System manuals 10 years
T
Activity reports (if accounting documents) 10 years
Telephone expense reports (if accounting documents) 10 years
U
Receipt certificates (freight forwarder) 6 years
Overtime lists (if accounting documents) 10 years
Wire transfer documents 10 years
V
Liabilities (summaries) 10 years
Sales documents 10 years
Sales ledgers, journals 10 years
Asset inventory 10 years
Capital-forming benefits (if accounting documents) 10 years
Capital-forming benefits (business letters) 6 years
Shipping and freight documents (if accounting documents) 10 years
Shipping documents (if accounting documents) 10 years
Insurance policies (after the insurance expires) 6 years
Contracts 6 years
Contracts (to the extent relevant under commercial/tax law) 10 years
Powers of attorney (documents) 6 years
W
Inventory records (physical inventories) 10 years
Goods receipt and issue ledgers 10 years
Bills of exchange (to the extent they are accounting documents) 10 years
Christmas bonus (to the extent they are accounting documents) 10 years
Advertising expenses, receipts 10 years
Securities schedules as balance sheet documents 10 years
Securities prices as accounting documents 10 years
Z
Payment orders (insofar as accounting documents) 10 years
Signing authorizations 6 years
Customs documents 10 years
Access regulations for computerized accounting 10 years
Interim balance sheet (in the event of a change in shareholders/change in
fiscal year) 10 years
Any questions? We are your tax advisor in Düsseldorf!
This article is intended to help you get a good overview of retention periods. However, it is important that you consult a tax advisor in case of doubt to ensure compliance with the most current laws! As tax advisors in Düsseldorf, we are happy to assist you with this matter. Simply schedule an appointment for your personal consultation in Düsseldorf or Oberhausen. Contact us here.
We look forward to your visit!
