Estimation authority when using old cash registers

The Federal Fiscal Court has commented on the requirements and limits of an estimate by the tax office when using old cash registers.

Over the years, the requirements for cash registers and other cash register systems have been tightened several times by the tax authorities. Those who do not adhere to these requirements risk a complete estimate of their income by the tax office, which is usually significantly higher than the declared turnover. The Federal Fiscal Court has now had to deal with such a case in which a restaurant operator was still using a very simple electronic cash register from the 1980s that no longer met the requirements in force during the period in question.

It is true that the Federal Fiscal Court shared the view of the tax court that the cash register used was objectively manipulable, which constitutes a formal defect of great importance that in principle gives the tax office the power to make an estimate. However, the judges also stated that the knowledge of the manipulability of such old cash register models had only grown over time and that the entrepreneur should therefore be granted protection of legitimate expectations under certain conditions. The weight of the formal deficiency due to the manipulability of the cash register is then not as high as in the normal case and can even be completely eliminated if additional evidence is kept.

In the ruling, the Federal Fiscal Court therefore explained in more detail under which conditions and to what extent the tax office is authorized to make an estimate. In particular, it is not sufficient to merely name formal or material deficiencies, but these must also be weighted according to their significance for the specific individual case. A full estimate with complete rejection of the entrepreneur's profit determination is only permissible if the deficiencies identified are serious.

The use of a manipulable cash register system generally constitutes a formal defect of great importance, as in such a case there is no guarantee for the completeness of the revenue records due to the system. However, the weight of this deficiency can be reduced to a lesser degree in individual cases. This applies in particular if the POS system was widespread and generally accepted at the time it was used and actual manipulation is unlikely.

Despite the formal deficiency due to the use of an objectively manipulable electronic cash register, an estimate by the tax office is inadmissible if the entrepreneur keeps additional records which he is not obliged to keep and which offer a sufficient guarantee for the completeness of the revenue recording.

The Federal Fiscal Court also points out that in the case of simple electronic cash registers, the functions and the status of the fixed programming (firmware) are documented in the operating instructions. Changes to the settings of the cash register, on the other hand, must be documented by the entrepreneur when the changes are made by preparing corresponding logs of the settings made.