Customs, external and preferential audit

Customs, external and preferential audit

1. overview

Pursuant to Section 85 of the Tax Code, the tax authorities are required to assess and collect taxes (including customs duties) uniformly in accordance with the law. In order to achieve or ensure this objective, the Customs Administration may, in addition to exercising tax supervision, carry out the following audits:

• A retrospective audit in the field of customs law as a customs audit,
• an audit in the field of excise duties as an external audit, and
• an examination of the export of goods under preferential conditions on the basis of international treaties or the law of the European Communities as a preferential examination.

There are various legal bases for the individual audits in national law and, in particular, also in Community law. Community law is supplemented by national law in the Tax Code on external audits and tax supervision.

The most important legal bases are:

• For the subsequent verification of customs declarations Art. 48 Union Customs Code (Art. 78 Customs Code) in conjunction with. §§ Sections 193 et seq. AO (German Fiscal Code),
• for national excise duties, §§ 193 ff. AO,
• for audits in the field of spirits monopoly law, § 48 of the Spirits Monopoly Law,
• for examinations of the export of goods under preferential conditions based on the law of the European Community, Article 56 (2) (d) of the Union Customs Code (Article 20 (3) (e) of the Customs Code),
• for preferential export controls based on international treaties, the relevant preferential agreements in conjunction with Article 56(2)(d) of the Union Customs Code (Article 20(3)(d) of the Customs Code), and
• for examinations of the export of goods under preferential conditions with regard to the free circulation status.

In addition to the Tax Code, the Examination Service Regulations for Customs and Excise Duties (PrüfungsDV-ZuV) contain regulations on the performance of customs, external and preferential examinations.

Customs and external audits are ordered by the main customs office from whose district the taxpayer operates his business or which is responsible for taxation. The content of the audit order is the legal basis for the customs/external audit, the scope of the audit and the period to be audited. In the scope of the audit, the types of taxes to be audited and/or specific facts are specified. The taxpayer is notified of the audit order immediately. No more than three months should elapse between the notification and the start of the audit. In principle, the audit shall commence at the time when the auditor performs specific audit activities. At the time when the auditor arrives at the place of the intended audit, the possibility of an exempting self-disclosure does not apply.

During the customs/external audit, the taxpayer must be informed of the facts ascertained and the possible tax consequences resulting therefrom, provided that the purpose and course of the audit is not impaired thereby (Section 199 (2) AO in conjunction with (24) PrüfungsDV-ZuV). However, the auditor's opinion is not binding on the competent body. Pursuant to Section 201 AO, a final meeting is to take place in which, in particular, disputed facts are to be discussed.

In the examination order for a preferential examination, the respective legal bases for the examination of the export of goods on preferential terms are specified. The individual preferential agreements are specified in detail. The scope of the examination is precisely defined, e.g. by specifying the preference document to be examined. In all other respects, the preferential examination is carried out in the same way as the customs/external examination.

2. initiation of criminal proceedings

Pursuant to Section 397 (3) of the Fiscal Code (AO), the initiation of criminal proceedings must be disclosed to the accused at the latest when he is requested to state facts or submit documents related to the criminal offense of which he is suspected. In principle, the taxpayer is obliged to cooperate. However, according to Section 393 (1) sentence 2 of the German Fiscal Code (AO), coercive measures against the taxpayer are inadmissible if this would force him to incriminate himself for a tax offense or tax misdemeanor committed by him. If further information is obtained during the external audit by taking advantage of the taxpayer's duty to cooperate, even though the taxpayer was not informed of his status as a defendant, this will result in a prohibition of use under criminal law. 3.

3. the audit order is a blocking reason for a self-disclosure exempting from prosecution

Pursuant to Section 371 (2) no. 1 a) of the German Fiscal Code (AO), the disclosure of an audit order is a ground for blocking a voluntary disclosure that exempts the taxpayer from prosecution. It is therefore too late to make a voluntary disclosure for the assessment periods to which the audit order relates. However, it must be examined whether a voluntary disclosure is still possible in the case of tax evasion for other periods.

4. legal remedies

The audit order, the determination of the start of the audit, the determination of the place of the audit and the other orders associated with the audit order are independently contestable administrative acts. Although the appointment of the examiner is not an administrative act, legal action can be taken against the appointment of the examiner in exceptional cases that go beyond a concern of bias. However, the objection to the examination order does not have a suspensive effect. Therefore, an application for suspension of execution must first be filed with the tax authority and, in the event of rejection, with the tax court pursuant to Section 69 (3) sentence 2 of the German Fiscal Court Code (FGO).

Tax assessments that are based on an unlawful audit order must be revoked. In this case, the audit findings are generally not usable. However, a prerequisite is that the audit order has been successfully challenged, unless the audit order is invalid (§§ 124 f. AO). According to the case law of the Federal Fiscal Court (Bundesfinanzhof, BFH), however, the prohibition of utilization due to formal deficiencies in the audit order does not apply, among other things, if taxes are assessed for the first time on the basis of findings from the external audit or if the assessment is made subject to review (Section 164 AO).