Retention Obligations and Periods

Trading entrepreneurs and self-employed professionals are subject to certain recording and accounting obligations under trade and tax laws.

Documents to be retained

The following documents need to be archived in an orderly manner in accordance with the provisions set forth in the revenue code (Sec. 147 of the Abgabenordnung [German Revenue Code]):

• Books and records, inventories, financial statements, management reports, opening balance sheets and the work instructions necessary for understanding them and other organisational documents;
• Commercial or business letters received as well as copies of all commercial and business letters sent out;
• Posting receipts;
• Documents to be attached to a customs declaration, insofar as the customs authorities waive their presentation or have returned them after submission;
• All other documents insofar as they are important for taxation.

Retention periods

The following applies under tax laws:

• A ten year retention period applies to trading books, inventories, opening balance sheets, financial statements as well as the work instructions necessary for understanding them and other organisational documents. This ten year retention period also relates to other documents important for taxation (in particular accounting receipts).
• A six year retention period applies to all commercial or business letters received and for copies of commercial and business letters sent out.

The ten year retention period commences upon the closure of the calendar year in which the last registration was made in the trading book or in which the inventory was prepared or in which the opening balance sheet and the financial statements have been approved. The six year retention period commences at the closure of the calendar year in which the trade or business letter was received or sent out.

Exception: expiry suspension

The above periods will not apply insofar and for as long as the documents are important for taxation, for instance as the assessment period has not yet expired or as legal proceedings are pending (expiry suspension under Sec. 147 (3) sentence 3 of the AO). Tax-relevant documents should only be destroyed at the end of the year in consultation with the tax consultant.

The person responsible for complying with the rules of law is either the individual entrepreneur or all shareholders in an OHG [General Partnership], or the personally liable shareholders in a KG [Limited Partnership]. In capital companies, these rules shall be complied with by the executive bodies (managing director or members of the Board of Directors of the company).

Tax payers with high surplus income

Tax payers who pay taxes on positive income (surplus income) exceeding € 500,000.00 per calendar year must retain all records and documents on income and income-related expenses underlying the surplus income for a period of six years (Sec. 147a of the Revenue Code). Records and documents underlying the surplus income might be, among others: account statements, billing receipts on purchase and sale of securities, rental agreements, etc.

Retention obligation and periods for the tax payroll office

Each employer keeps a dedicated wage account for each employee. Any and all receipts and proofs will be included in the wage account. Documents for the wage account (wage billing documents, wage lists, travel expense bills, tax-free reimbursements) must be retained for a period of six years.

Social security

The applicable social security laws provide for a retention period until the expiry of the calendar year subsequent to the last company audit (Sec. 28 et seq. (1) of the SGB IV [Social Security Code Volume IV]) for remuneration documents, contribution statements and contribution receipts, as well as for certificates for the employee.

Retention periods for electronically transferred documents

If documents relevant for tax purposes are transferred electronically, they shall be retained in accordance with the general principles in their electronic format as these are originally digital documents (Ordinance of the Bavarian State Office for Taxes of 19 May 2014 -S 0317.1.1-3/3 St42). If entities were to print out electronic account statements and delete the digital documents, this would constitute a breach of these retention obligations. A comprehensive system and procedural documentation must be available for electronic archiving. Entities must record “in what way documents received in electronic form will be retained, archived and processed“.

The retention periods for hardcopy documents apply analogously to electronic documents.

• Retention periods of important documents from A to Z;
• Billing documents of all types: 6 years;
• Letters of credit: 10 years;
• File memos and other notes: 6 years;
• Offers submitted: 6 years;
• List of inventories: 10 years;
• Letters: see business letters;
• Balance sheets, in particular opening balance sheets and annual balance sheets, intermediate balance sheets: 10 years each;
• Accounting documents including all journal entries: 10 years;
• Data carriers with stored accounting documents: 10 years;
• Logbooks for vehicles: 10 years;
• Salary / wage lists: 10 years;
• Business letters
  • Irrelevant for tax purposes: 6 years;
  • Relevant for tax purposes: 10 years;
• Inventory: 10 years;
• Wage accounts: 6 years;
• Petty cash books: 10 years;
• General invoices and receipts: 10 years;
• Legal disputes: 6 years;
• Tax returns: 10 years;
• VAT book (for travel business operators) and receipts, VAT returns: 10 years;
• Goods receipt and sales journals: 10 years.

Version of: 01 January 2015

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No warranty is given for the full correctness of the information presented, despite a careful arrangement of all data. Please do not hesitate to contact us for a personal discussion if you have special questions regarding one of the topics.