New requirements for electronic cash registers from 2020

From 2020, the use of tamper-proof cash registers will be mandatory by law. The Federal Ministry of Finance has regulated many more details on these new requirements.

Under the Cash Register Act, companies with electronic cash registers or cash register systems are required to equip them with a certified technical security device (tSE) from 2020. In addition, businesses must report the acquisition or decommissioning of cash registers to the tax office and observe other new requirements for cash register management.

However, the law does not contain any obligation to use electronic cash register systems. This means that manual records can still be kept at weekly markets, festivals, farm stores and the like, for example. Even though the Cash Register Act was passed in 2016, the Federal Ministry of Finance did not regulate many of the details of the amendment until the summer of 2019. Here is an overview of all the key requirements.

• Recording systems: The new requirements apply to electronic recording systems with a cash register function. This is the case for a device if it can be used to record and process at least partially cash payment transactions. This also includes electronic forms of payment used on site (cash cards, virtual accounts, bonus point systems, etc.) as well as vouchers, credit cards and the like. A storage facility for the cash managed (e.g. cash drawer) is not required. Pure accounting systems are therefore not considered to be recording systems within the meaning of the Cash Act.

• Safety device: Since January 1, 2020, electronic cash registers and recording systems must have a certified tSE that guarantees the completeness and immutability of the recorded business transactions. Interconnected devices can also share the same tSE. The tSE must not only record all business transactions in the POS system in a tamper-proof manner, but also other transactions (training bookings, immediate cancellations, terminations, etc.). If the POS system cannot be retrofitted but meets the previous requirements and was purchased between 2010 and 2019, it may continue to be used until the end of 2022. The existence of these requirements must be proven.

• Failure: If a tSE fails, the downtime and reason must be documented. This can also be done automatically by the POS system. If the system can continue to operate without the tSE, this failure must be evident on the document. If the failure only affects the tSE, the POS system can continue to be used until the reason for the failure has been eliminated. However, the entrepreneur must immediately remedy the cause of the failure or take measures to eliminate it. The obligation to issue receipts shall continue to apply during the failure and shall only cease to apply in the event of a complete failure of the POS system or in the event of a failure of the print or transmission unit. If only the print or transmission unit for the receipt fails, the POS system must continue to be used.

  

• Document issue requirement: From 2020, anyone who records business transactions using an electronic cash register system will be required to issue a receipt for the customer. The receipt can be provided electronically or in paper form. However, the receipt issue requirement only applies to business transactions involving a third party. Withdrawals, deposits and the like are therefore not affected. The receipt must be issued immediately after the transaction has been completed.

• Electronic receipts: The customer's consent is required for electronic provision of the receipt. Regardless of the receipt by the customer, the electronic receipt must be provided in any case. However, the visualization of a receipt on a screen of the seller (cash register display, etc.) alone is not sufficient. The receipt must be provided in a standardized file format (JPG, PNG, PDF, etc.) so that retrieval and display at the customer's site is possible using free standard software.

• Paper receipts: When issuing paper receipts, the offer of acceptance to the customer is sufficient if the receipt has been previously created and printed. There is no obligation for the customer to accept the receipt or to keep paper receipts that have not been accepted.

• Exemption: In the case of sale of goods or provision of services to a large number of unknown persons, exemption from the obligation to issue receipts is possible upon application and with the consent of the tax office. However, the exemption can only be considered if the obligation is associated with a material or personal hardship for the business. The costs incurred alone do not constitute a material hardship. The granting of the exemption also does not release the entrepreneur from the customer's entitlement to the issuance of a receipt.

• Storage: The data created by tSE can indeed be transferred from the POS system to an archiving system and deleted in the POS system. In this case, however, the data must continue to be preserved in its entirety together with logging data for archiving and must be exportable in the prescribed form during the retention period. In the event of a tax audit, the data must be made available.

• Reporting requirements: Anyone who uses electronic cash registers or recording systems must report any acquisition or decommissioning to the tax office. This also includes the destruction or loss of a cash register. The report must be submitted within one month of the acquisition or decommissioning. In addition to the name and tax number of the company and the date of acquisition or decommissioning, the content of the report must also include information on the type of tSE and the type and number of electronic recording systems used and their serial number(s). In addition, the cash registers must be clearly assigned to a permanent establishment in the report if the company has several permanent establishments, and a separate report is required for each permanent establishment. The tax authorities use this information, among other things, when selecting cases for external audits.

• Sanctions: If violations of the new obligations are detected, they can be punished as a tax offense with a fine of up to 25,000 euros, even if no tax loss has been incurred. The only exceptions to these draconian penalties are violations of the duty to notify and the duty to issue receipts. However, this does not mean that the tax office cannot impose other sanctions for violations of these two obligations.

Mandatory information in the cash voucher

The minimum information on a receipt is regulated independently of the VAT requirements for an invoice. Therefore, if the creation of an invoice is not required, a receipt must still be created for each cash transaction, which must contain at least the following information:

• The full name and address of the supplier. This requirement is met if the name and address of the supplier can be clearly determined from the designations contained in the document.

• The date of document issuance and the times of operation start and operation completion.

• The quantity and type of items delivered or the scope and nature of other performance.

• The transaction number generated by the cash register or tSE.

• The remuneration and the VAT amount due on it for the supply or other service in one sum as well as the applicable tax rate or, in the case of a VAT exemption, an indication that a tax exemption applies to the supply or other service. If a business transaction does not require the issuance of a VAT invoice but another document (e.g. delivery bill), no objection shall be raised if this document does not contain the tax amount.

• The serial number of the electronic recording system or the serial number of the safety module, which is also stored during internal logging.

• The amount for each payment type used in the transaction.

• The current status of the signature counter in the security device used in the POS system. The signature counter is incremented by the value 1 for each check value calculation.

• The test value generated by the safety device for the operation. This test value is compulsorily generated from all the data to be saved for the operation when the operation is completed or aborted.

All nine mandatory disclosures must be legible to anyone without machine assistance, regardless of whether the receipt is printed on paper or provided electronically.

Deadlines for the new obligations

The Cash Act has introduced three new duties, all of which were supposed to come into force on January 1, 2020. However, the financial administration has delayed its part of the necessary preparations for too long, which is why different deadlines must now be observed for each duty.

• Safety module: The conversion or retrofitting of POS systems to the new requirements was actually to be completed by December 31, 2019. However, the manufacturers were unable to start developing the final modules in time due to the delayed specifications by the tax authorities, with the result that many companies were unable to meet the statutory deadline. The tax administration has not changed anything about the deadline itself, as this is stipulated in the law. However, the Federal Ministry of Finance has ruled that no objections will be raised until September 30, 2020 if a business has not yet completed the conversion.

• Reporting requirements: From January 1, 2020, anyone using electronic cash registers or recording systems would actually have to notify the tax office of every acquisition or decommissioning on the officially prescribed form, and for cash register systems acquired before 2020, the notification would have to be made by January 31, 2020. However, the tax authorities have not published a form, which means that the reporting obligation does not yet apply. Instead, the tax authorities want to rely on an electronic reporting procedure for the reports, but this is still in the works. Until this is available, companies are exempt from the reporting obligation. The Federal Ministry of Finance has not indicated how long it is expected to take for the new reporting procedure to become available and how much time the companies will then have to report.

• Document issue requirement: The only new requirement that all businesses will have to comply with from January 1, 2020 is the obligation to issue receipts, which has been the subject of much debate in the run-up to the new legislation. An exception to the receipt output requirement only applies if no electronic recording system is used (e.g. "open store cash register").

• Legacy systems: If a cash register cannot be retrofitted but meets the old requirements and was purchased between 2010 and 2019, it may continue to be used until the end of 2022.