Correction of final tax assessment notices following an external audit

July 18, 2024

If the tax office finds formal deficiencies in the determination of a taxpayer’s profit, this not only allows for an additional assessment under Section 162 of the German Fiscal Code (AO) if the notices are subject to a deferment of assessment. Rather, this constitutes a fact that has become known subsequently under Section 173 (1) no. 1 of the German Fiscal Code (AO).

However, this fact must also be legally relevant. This can only be the case if the formal deficiencies result in an authorisation to estimate. The Lower Saxony Fiscal Court has not yet made this determination and will be called upon to do so by the Federal Fiscal Court for the second round of proceedings. However, contrary to common belief, formal deficiencies only justify an authorisation to estimate if the reasonable means of clarification available to the tax office have been unsuccessful. The additional assessment must also be based on the objective of using the taxation bases that are most likely to be correct.