Meanings of Retention Periods Part V
Where do you have to keep your documents?
In the tax code (§ 146 AO) it is regulated that the books and the otherwise necessary records “are to be kept and kept within the scope of this law”. This means that you are legally obliged to keep your documents in Germany. Beyond that, however, there are no detailed requirements for a specific location.
So that you can ensure that all documents are unchangeable, complete, correctly readable, traceable and machine-evaluable and, above all, can be viewed at any time, it is ideal if you use good accounting software for your bookkeeping . With its optimally coordinated functions, such software fulfills all legal requirements and above all helps you with other requirements. For example, how to properly create invoices.
You can digitize all of your tax-relevant documents and archive them in the GoBD-compliant software. This not only saves time, but also paperwork and you are always on the safe side when the tax office wants to check your documents.
Destruction options after the end of the retention period
After the retention period has expired, you can usually destroy the documents. After the retention period has expired, you may only not destroy documents if they are still relevant to various processes or incidents. The documents must still be kept after the end of the retention period, if an external audit has started, if pending investigations relating to tax or fines are ongoing, or if a provisional tax assessment applies. In the case of pending proceedings or legal remedies that are expected due to an external audit or to justify applications by a company, the documents must also be kept beyond the end of the retention period.
In theory, you can simply delete the digital data and shred paper documents. However, it is important, especially since the tightening of the legal regulations under the GDPR , that you think about data protection. Especially if your documents contain not only company-internal secrets, but also sensitive personal data. You must destroy these so well that they can no longer be made legible by strangers. Even before the GDPR, DIN 66399 regulated the “regulations for data protection compliant file disposal” according to the Federal Data Protection Act. Disposal was linked to various data protection classes.
Creation of a provision
According to ESHAOXING.INFO, the storage of business documents is associated with costs, for example for organization systems in the form of files or folders, shelves and index furniture as well as for storage rooms. Archiving on data carriers also generates costs. Companies must set up a provision in the annual financial statements for the costs of storing business documents . This provision applies to uncertain liabilities. According to commercial law, such provisions are subject to a passivation requirement. The retention obligation is economically caused in the year in which the respective documents are accrued. If invoices and commercial letters are written in one year, the retention obligation is created in this year.
Consequences of violations of the retention periods
According to case law, the burden of proof lies with the taxpayer. The taxpayer must prove tax-relieving and tax-reducing facts if proceedings regarding tax evasion are pending against him. Violations of the retention requirement are also considered violations of accounting and recording obligations . If documents that are required to be retained are not available, the tax authorities can estimate the tax bases due to the lack of evidential value. In the worst case, the maximum amount can be set for a company. The tax authorities can, for example, use comparative figures from the same industry as a basis. If a company violates the retention obligation and thus the accounting obligation, so sanctions can arise. If invoices are not kept for ten years, a fine of up to 5,000 euros can be levied on a company, just as with the waiver of invoicing. If private individuals do not comply with the retention obligation because they do not keep invoices for the services relating to property for at least two years, they can be fined up to 500 euros.
Compliance with the retention periods is important for the evidential value of a company. Companies are obliged under tax and commercial law to store accounting receipts, business documents and invoices and must expect penalties if they fail to comply with their retention periods.
Compliance with the retention periods is not only relevant for you because it could threaten a fine. In cases where you lack powers of attorney and documents, legal proceedings can also result in negative results. A deficiency in your newly acquired home that you cannot prove on the basis of documents and have the repairman repaired could cost you a lot of money. Some missing documents can even drive you into ruin with such types of “consequential damage”. It is therefore in your own interest that you adhere to the retention periods. Therefore: better keep too long than too short!