VAT special audits

Increased risk for companies: Greater vigilance required for VAT

Companies operating in Germany need to be especially vigilant in managing their VAT:
Recent figures from the German tax authorities show that special VAT audits alone in 2024 led to additional tax revenues totaling 1.63 billion euros.

 

Background: What is a VAT special audit in Germany?

If a tax office suspects that a company is not properly remitting VAT, it can order a so-called VAT special audit – a targeted audit focusing exclusively on VAT.

Unlike a general tax audit, this measure is: faster, more focused and can affect companies of any size and industry.

The goal of these audits is to detect irregularities or errors in VAT returns early – in particular:

• unjustified input tax deductions
• undeclared or incorrectly declared sales
• faulty or incomplete invoices

 

Results 2024: Impressive audit efficiency:

Official figures from the German tax authorities speak for themselves:

• 63,733 special audits were conducted in 2024
• 1,630 auditors were deployed – averaging 39 audits per auditor
• Each auditor generated an average additional tax revenue of 1 million euros
• A total of 1.63 billion euros in additional taxes were assessed

 

What does this mean concretely?

These amounts do not come from fines but from additional VAT assessments imposed due to errors or omissions found in company filings.

The most common causes are:

• errors in VAT collection or input tax deduction
• missing or insufficient documentation
• invoice errors (missing mandatory information, formatting defects)
• incorrect handling of cross-border transactions (intra-community supplies, exports, etc.)

 

Implications for French and international companies

These developments particularly affect:

• French companies with subsidiaries, permanent establishments, or taxable activities in Germany
• Companies subject to German VAT (e.g., B2C e-commerce sales, cross-border services, intra-EU deliveries, etc.)

What are the concrete risks?

• Significant VAT back payments (VAT + interest)
• Denial of input tax deduction due to incorrect invoices
• Criminal risks in case of suspected tax fraud – even for negligent mistakes

 

Concrete recommendations

We strongly advise affected companies to take the following actions:

1. Conduct an internal audit of VAT declarations in Germany
2. Review invoicing processes (mandatory information, cross-border transactions, tax exemptions, etc.)
3. Implement regular internal control mechanisms, especially regarding:
   1. accuracy of reported amounts
   2. consistency between accounting records and VAT returns
   3. proper archiving of all documents and proofs.