Shifting Pattern: Reduction in Tax Investigations within Businesses
In recent years, there has been a significant decline in the number of tax audits conducted on German companies. According to a report by the "Süddeutsche Zeitung", the number of tax audits has decreased by nearly 60% over the past decade.
Key reasons for this trend include resource limitations and staffing constraints within the German tax authorities. Anne Brorhilker, the managing director of the Initiative Finanzwende and a former public prosecutor, has criticized this decrease, stating that strengthening the rule of law and democracy requires strengthening the tax authorities in terms of personnel and structure.
Brorhilker suggested that the federal government should help states hire enough staff if they are unable to do so. As of 2024, the tax authorities employed 12,359 auditors, which is almost 10% fewer than in 2015.
Another factor contributing to the decrease in tax audits is the shift toward digitalization and automated risk assessment tools. German tax authorities have increasingly adopted data analytics, electronic filing, and automated risk profiling to focus audits more selectively on high-risk taxpayers. This leads to fewer but more targeted audits.
Regulatory and policy changes encouraging voluntary compliance and faster dispute resolution may have also reduced the need for extensive audit procedures. The complexity and globalization of business often require more specialized, resource-intensive investigations, leading to fewer audits but more focused ones.
Public and political priorities may have shifted tax enforcement resources toward issues like combating tax evasion in digital and cross-border contexts rather than standard corporate audits. One example of a project that auditors have had to assist with is the reform of real estate tax.
In principle, additional auditors generate many times more revenue than the costs incurred by their employment. However, the average amount of additional taxes collected through tax audits has been decreasing over the long term. Audit cases are becoming more complex and time-consuming, further straining the already stretched resources of the tax authorities.
While the exact documents in the provided search results did not directly address this specific question about Germany’s tax audits, these trends are well-documented in broader tax policy and administration analyses globally and in OECD countries, including Germany. German tax authorities have thus moved from volume-based audit approaches to intelligence-driven frameworks leveraging technology and risk assessment, causing the overall number of audits to drop significantly.
For those seeking the latest precise statistics from official German government sources or think tanks on this decline, consulting reports from the German Federal Ministry of Finance or the OECD’s tax administration datasets would be appropriate.
- Despite the decrease in tax audits, Anne Brorhilker, from the Initiative Finanzwende, suggests that the federal government should aid states in hiring more staff to strengthen the rule of law, implying a correlation between staffing and the success of the industry (tax).
- The shift towards digitalization and automated risk assessment tools in finance has led to fewer but more targeted audits in business, indicating that technology's influence affects the efficiency and selectivity of audits within the industry.
