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March 20, 2010 | 20,00 EUR | answered by Steffan Schwerin

Topic: Cash flow statement
The tax office conducted an external audit on me according to Paragraph 193 (1) of the Tax Code.
The accounting was mostly in order.
During the closing discussion, it was made clear that there were no signs of tax evasion.
I am self-employed and my wife is employed by me.
We are jointly assessed and live in a community of gains.
Now I received a letter from the tax office where I am supposed to explain a missing/open amount (cash flow statement) for the 3 years of €25,000.
(Initially, all cash balances at the beginning of the audit period or calendar year are added up. This sum is then added to all taxable income and other cash inflows. This determines the funds available to the entrepreneur during the period in question for the tax authorities. From the amount calculated, all private expenditures and any remaining cash balances at the end of the observation period are deducted. If a negative amount is obtained, the tax authorities regularly assume cash outflows that are not covered by declared profits. In this case, the auditor is led to conclude that undeclared business income or black money was used for this purpose.)

At the beginning of the tax audit, the question was asked if I had private loan agreements, which I denied. Can I respond as follows, or would you recommend something else (wording?)?

Subject Cash flow statement - Your letter dated

Subject Securities 2008:
At all times, a maximum amount of €5,050 was in circulation.
An share was always bought and then sold, etc.
Ending balance €5,038.

Cash flows:
In the last 10 years, I received cash gifts totalling approximately €30,000 from my grandmother Name - Address......
Additional cash inflows of approximately €5,000 were received as gifts in the year ... for my wedding with my wife from relatives and acquaintances.
In 2004, my wife received a severance payment of €3,500 through a lawsuit at the labor court against her former employer.
I cannot provide bank statements from my grandmother as they were not kept.
I would like to point out that there is no obligation to keep private receipts and documents (§ 147 of the Tax Code).
There is no obligation to obtain destroyed private documents.
All purchases of any kind were made from these funds.

Cost of living / Conclusion:
The available funds for me and my wife do not fall below the standard rate for the assistance for living expenses set out in the Federal Social Welfare Act.
I also refer to the judgment of the Saarland Tax Court (Case No.: 1 K 2037/04)
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How can I argue/react if the tax office is not satisfied and a sales estimate results in a higher tax assessment to my disadvantage? (Objection - lawsuit before the Tax Court)
Can I question whether a cash flow statement (Saarland Tax Court (Case No.: 1

Steffan Schwerin

Dear questioner,

I will answer the questions you have asked, taking into consideration the facts presented and your input, as follows:

If the declared profit is too small and the new car is too big, a tax auditor quickly becomes suspicious. There is a risk of a cash flow calculation - which self-employed individuals can now defend against.

However, self-employed individuals could avoid this - and refer to a recent judgment of the Saarland Fiscal Court (Case No.: 1 K 2037/04).

According to this judgment, a cash flow calculation only makes sense if the self-employed individual's available funds are below the standard rate for subsistence support, which has been established in the Federal Social Assistance Act.

All kinds of donations must be included in the calculation.

If the self-employed individual's available funds exceed the rate, a cash flow calculation does not need to be considered.

If the tax office wants to make profit and turnover estimates based on a cash flow calculation, you should consult a tax advisor. They should review the requirements of this judgment.

Additionally, you should inform the tax office where financial support is coming from.

If liability is considered, your spouse is also jointly liable.

Finally, I would like to point out that this platform cannot replace comprehensive and personal legal advice. The sole purpose is to provide an initial rough assessment of your legal issue based on the information you have provided to a lawyer. The legal advice I provide is based solely on the information you have provided. Adding or omitting relevant information in your description of the facts may result in a completely different legal assessment.

I hope I have given you an initial overview and that my explanations have been helpful to you. You are welcome to contact me through the follow-up option on this platform.

Furthermore, I am available for representation. I would deduct the initial consultation fee from the total amount.

A greater distance between lawyer and client is generally not a problem. With the help of modern communication tools such as email, mail, fax, and phone, representation is also possible.

Best regards,

Steffan Schwerin
Lawyer

Law Firm Steffan Schwerin
Golmsdorfer Straße 11
07749 Jena

Tel.: 03641 801257
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Email: raschwerin@raschwerin.de

Website: www.raschwerin.de