Decrease in Number of Tax Audits Observed in Corporations, According to Report
The Süddeutsche Zeitung has published a report highlighting a significant decrease in the number of tax audits in companies across Germany over the past decade. This trend is primarily attributed to factors such as digitalization, automation, resource constraints, and a shift towards risk-based and automated audit approaches.
According to the report, the tax authorities employed 12,359 auditors in 2024, a near 10% decrease from 2015. Consequently, the number of tax audits in 2024 is approximately 140,000, a considerable drop from previous years. However, the specific reasons for this decrease were not mentioned in the report.
Anne Brorhilker, a former public prosecutor and now CEO of the Initiative Finanzwende, criticized this trend in the Süddeutsche Zeitung. She suggested that if the states are unable to hire enough staff, the federal government should step in to help. Brorhilker emphasized the importance of strengthening the tax authorities in terms of personnel and structure to uphold the rule of law and democracy.
The report also pointed out staff shortages as one reason for the decrease in tax audits. Many auditors have had to assist with other projects, such as the reform of real estate tax, within their own authorities. The amount of back taxes collected through these inspections has been decreasing on average over the years, which further underscores the importance of regular audits.
The audit rate for large companies was significantly higher at 17.8%, indicating that these companies are under greater scrutiny. Audit cases are becoming more complex and time-consuming, according to the report, which may also contribute to the decrease in tax audits.
The survey was conducted in the 16 federal states of Germany, but the report did not mention any specific reasons for the staff shortages or the reform of real estate tax. The report also did not specify whether the staff shortages and complex audit cases affected the number of audits in previous years.
The exact number of tax audits in previous years was not provided in the report. However, the official number of businesses audited in the previous year, as reported by the Federal Ministry of Finance in October 2024, was 146,516.
While the report did not provide direct figures or German-specific studies, these trends are consistent with broader European and OECD practices regarding tax administration modernization and audit strategies. The reliance on technology and risk-based audit models, along with resource constraints, form the core reasons behind the decreased volume of tax audits in Germany over the past decade.
The decrease in tax audits in businesses, as highlighted by the Süddeutsche Zeitung's report, can be partly attributed to staff shortages within the tax authorities. This shortage is further exacerbated by the need for auditors to assist with other projects like the reform of real estate tax.
The adequate funding and staffing of tax authorities are crucial for upholding the rule of law and democracy, as emphasized by Anne Brorhilker, a former public prosecutor and CEO of the Initiative Finanzwende. This statement underscores the interconnection between finance, business, and governance in maintaining a robust tax system.
