Relocation of electronic accounting and electronic records within the EU now possible without prior application

The Annual Tax Act 2020 has lead to changes regarding the relocation of electronic accounting and electronic records abroad. According to the Act, which entered into force on 29 December 2020, it is no longer necessary to submit a prior application for relocations within the EU.

Key changes

Prior to the changes made by the Annual Tax Act 2020, relocation to another country was possible only if certain requirements were fulfilled and on submission of an application to the competent tax office. Now, relocation within the EU is conditioned only on the requirement that full access to the data is possible for external tax audits (Außenprüfungen) and cash-register (Kassen-) and VAT-inspections (Umsatzsteuer-Nachschau).

With regard to the relocation to a non-EU country, only small changes were made to the existing law. Therefore, among other things, an application still requires that the location of the data processing system be disclosed to the tax authorities and that taxation must not be impaired due to the relocation. However, in contrast to the written application necessary under the old Act, it is now also possible to file the application electronically. In addition to the accessibility of the data during tax audits, full access to the data now also must be possible for cash-register and VAT-inspections. Overall, however, the changes affecting relocation to non-EU countries are minor.

Practical Implications

The changes in the Act regarding the relocation within the EU benefit the administration as well as companies by reducing unnecessary paperwork. Additionally, it provides companies with more flexibility regarding the relocation of electronic accounting and electronic records.

Dr Marion Frotscher

Simon Bauer