Draft bill on the external audit regulations (ApO)

 

What is the subject of the draft bill on the external audit regulations (ApO)?

The draft bill for the External Audit Regulations (ApO) replaces the previous Business Audit Regulations (BpO 2000). The content concerns:

• the adaptation of the existing rules to the modernized tax procedure law (in particular according to the law implementing the DAC7 Directive and modernizing tax procedure law),
• the explicit inclusion all external audits within the meaning of the Tax Code (tax audit, payroll tax external audit, special sales tax audit),
• Measures for acceleration external audits,
• credentials for Strengthening risk-oriented audit approaches and the interaction between states and the Federal Central Tax Office (BZSt).

The BpO 2000 will be completely rewritten for this purpose and in External Examination Regulations – ApO renamed.

Why is the draft relevant for German taxpayers?

For companies in Germany – especially for audit-intensive cases and internationally active corporate groups – the following key points emerge:

1. More focus on risk instead of "routine checks"
   Case selection should be "generally risk-oriented" (§ 2 ApO). Findings from (including international) risk assessment procedures, particularly those pursuant to § 89b AO, should be actively incorporated into the selection process. This increases the likelihood of audits for high-risk cases but can exempt less conspicuous companies.
2. More timely external audits, shorter audit periods
   External audits should generally take place promptly after the end of the last audited assessment period (§ 2 para. 3 ApO).
   For smaller companies, the audit period can be expressly limited to one or two years The number of exams will be limited (§ 5 para. 2 ApO). This aims to enable faster, more focused exams.
3. Increased importance of participation
   The instrument of qualified request for participation Section 200a of the German Fiscal Code (AO) is enshrined in the German Tax Procedure Code (ApO) (Section 9 Paragraph 4, Section 24 Paragraph 4 ApO). This increases the formal requirements for timely, complete, and structured cooperation.
4. Stronger role of the Federal Central Tax Office (BZSt) in cross-border matters
   The ApO (Examination Regulations) consolidates the rules for the participation of the Federal Central Tax Office (BZSt) in external audits (Section IV). For companies with international business relationships, this means more frequent involvement of specialized federal auditors – particularly regarding transfer pricing and cross-border arrangements.
5. Corporate and payroll tax audits are becoming more systematic.
   Group audits and coordinated external payroll tax audits are clearly structured (Section III, § 21 ApO). Larger groups with many employees and international structures, in particular, must expect increasingly frequent, consolidated, and uniformly managed audits.

What did the Federal Ministry of Finance (BMF) want to achieve with the individual regulatory areas?

1. General provisions (§§ 1–4 ApO)

• § 1 ApO – Scope of application:
  Objective: To clarify that the ApO for all external audits The provisions of the German Fiscal Code (AO) apply not only to standard tax audits. Only specific sections are exempt for special VAT audits and payroll tax audits.
• § 2 ApO – General Principles:
  Goal:
  • Emphasis on the risk-oriented case selection and
  • is timely review (without any individual legal entitlement to this).
    Findings from (international) risk assessment procedures should be explicitly incorporated. This strengthens the interaction with advance cooperation instruments (in particular Section 89b of the German Fiscal Code).
• § 3 ApO – Further tasks:
  Objective: To clearly classify other forms of auditing (e.g., follow-up checks, liquidity checks) as activities with an audit character.
• § 4 ApO – Size classes:
  Objective: To maintain the size classification (large, medium, small, and micro-enterprises) with the addition that misclassifications can be corrected at any time. This creates flexibility in audit planning.

The legislator's perspective:
External audits should be more transparent, modern, and more focused on high-risk cases. At the same time, the groundwork is being laid for faster audits (timely audits, flexible audit periods).

2. Conduct of the external audit (§§ 5–13 ApO)

Section 5 ApO – Scope of the external audit

• Large companies and corporations should generally Connection tested (Examination periods will follow one another).
• Criteria are defined when apart from the follow-up examination can be (e.g., economic efficiency, results of risk systems, findings from preliminary audits).
• For other companies, the audit period can explicitly be limited to only one or two years The number of participants will be limited in order to speed up the review.

The BMF's idea:
Greater flexibility without abandoning the goal of uniform taxation. Large companies remain the focus of continuous audits, while smaller companies can be audited more quickly and in a more targeted manner.

§ 6 ApO – Examination Order

• Adoption and specification of the new possibilities of § 197 AO:
  • The audit order may require the submission of documents that are subject to recording and retention requirements.
  • According to the template Examination focus areas be communicated.
• The term "participating auditors" is broadened to include, for example, IT specialists.
• Deadlines for the notification of the audit order are based on the size category (guidelines: four weeks for large companies, two weeks in other cases).

Consequence:
Early and clear information flow regarding the scope and focus of the audit, while simultaneously ensuring a legally sound design of the audit order.

Section 7 ApO – Place of external audit

• Establishment of a ranking of the examination locations in accordance with Section 200 AO (business premises, residential premises or official office).
• The previous subordinate status of inspections at the office is eliminated – business and residential premises are treated equally.
• Digitization: Provided digital documents may be stored and processed on secure systems.

Goal:
Practical handling of digital data and more flexible design of the examination location.

Section 8 ApO – Framework Agreements

• Clarification of the possibility that has existed since 2022, Framework agreements to be concluded in accordance with Section 199 Paragraph 2 Sentence 3 of the German Fiscal Code (AO):
  • Schedule for the exam,
  • Communication channels and deadlines for inquiries and responses,
  • regular meeting times and attendance hours,
  • technical requirements on site,
  • Defining exam priorities or excluding certain fields.
• The agreement is written to close and binds all parties involved, including the Federal Central Tax Office (BZSt), if it is subsequently involved.
• A one-sided Termination The framework agreement is possible.

Intention:
Framework agreements are a key instrument for acceleration and the structuring of external audits. They force both sides – the tax authorities and the taxpayers – to engage in reliable planning and communication.

Section 9 ApO – Obligations to cooperate and qualified requests for cooperation

• Repetition of the general obligations to cooperate (providing information, including from unnamed company employees, submission of documents).
• New: Principles for qualified request for participation according to § 200a AO:
  • It can happen at the earliest six months after the announcement the examination order.
  • Regular requirements:
    1. Prior request for cooperation pursuant to Section 200 AO,
    2. Failure to cooperate or insufficient cooperation,
    3. A renewed request with a deadline and a reference to a possible qualified request for cooperation.
  • A document request associated with the examination order counts as an initial request.

Goal:
The Federal Ministry of Finance (BMF) wants a gradual escalation the cooperation requirements (“warning shot system”) before formal measures such as compensation for delay in cooperation and surcharges pursuant to Section 200a AO are taken.

Sections 10–13 ApO – Further procedural points

• Section 10: Extended obligation to provide information to the Federal Central Tax Office (BZSt) cross-border tax arrangements.
• § 11: Clarification that the initiation of tax evasion proceedings is regularly reserved to the fine and criminal proceedings offices.
• § 12: Possibility of electronic or telephonic final meetings.
• § 13: Additions to partial audit reports and partial financial statements, involvement of the Federal Central Tax Office in case of deviations, clarification regarding legal force.

Consequence:
Procedures are standardized and adapted to digital communication; the role of the Federal Central Tax Office (BZSt) is strengthened.

3. External audit of groups of companies and internationally affiliated companies (§§ 14–21 ApO)

Group audit (§§ 14–18 ApO)

• Raising the revenue threshold for a formal group audit to 50 million euros in external sales (§ 14 ApO).
• Introduction and strengthening of the role of senior group auditor (§ 15, 17 ApO):
  • Coordination of examination periods and focus areas,
  • Establishment of binding guidelines and schedules,
  • uniform assessment of facts.
• obligation to Voting and approval the group audit reports (§ 18 ApO).

The BMF's view:
The group audit should be more efficient, standardized, and coordinated. Duplication of effort, conflicting assessments, and lengthy audit durations should be reduced.

Internationally affiliated companies (§ 20 ApO)

• Extension of the group audit logic to internationally affiliated companies and certain scenarios (e.g., real estate structures with many special purpose vehicles).
• The possibility of also creating complex, internationally influenced structures cross-border to be examined as an economic unit.

Consequences for cross-border structures:
The tax authorities will receive significantly sharper tools to uniformly record and examine group-wide matters (including transfer prices).

Coordinated external payroll tax audit (§ 21 ApO)

• Standardization of the already practiced, now fundamentally mandatory coordinated payroll tax audit.
• Mandatory coordination when certain thresholds are exceeded:
  • Group affiliation or affiliated companies,
  • Sales threshold of Section 14 Paragraph 1 ApO,
  • Number of employees: 10.000.
• Determination of a examination authority, especially in group structures with several domestic companies.

Relevance:
Large employers must prepare for systematically coordinated payroll tax audits, often running parallel to group-wide audits. This increases the demands on internal processes, payroll systems, and documentation.

4. Participation of the Federal Central Tax Office (§§ 22–26 ApO)

• All regulations regarding Participation of the BZSt External audits by the states are being bundled:
  • The Federal Central Tax Office (BZSt) compiles an annual list of cases in which it wishes to participate (§ 23 ApO).
  • Countries submit audit business plans, especially for large companies,
  • mutual agreement on the examination topics adopted from the federal examination,
  • Voting on the procedure and duration of the examination (§ 24 ApO),
  • Participation of the Federal Central Tax Office (BZSt) in audit reports and binding commitments (§ 25 ApO).
• For qualified requests for cooperation in cases involving the Federal Central Tax Office (BZSt), the procedure is specified in more detail (§ 24 para. 4 ApO).

Goal:
A closely integrated cooperation from federal and state levels, particularly in complex, often international cases, typically with a strong focus on transfer pricing and structuring.

Qualified participation – content and consequences for taxpayers

The qualified request for cooperation pursuant to Section 200a AO is one of the central levers of the draft bill and the modernized ApO.

What does "qualified request for participation" mean in practice?

• It is one of formal request for cooperation Impulse and Discussion
  • specific description of the required documents and information,
  • Setting a deadline,
  • Legal appeal.
• According to the ApO, it regularly requires:
  1. a first (normal) request for cooperation pursuant to Section 200 AO,
  2. a response that was insufficient from the perspective of the tax authorities,
  3. a renewed request with a deadline and a reference to a possible qualified request for cooperation.
• It can at the earliest six months issued after notification of the examination order (§ 9 para. 4 ApO).

What are the potential consequences of insufficient cooperation?

Based on the legal regulations (§ 200a AO) and the ApO system, the following consequences in particular can arise:

• Compensation for delay in cooperation and any applicable surcharges:
  If there is no response to a qualified request for cooperation, or if the response is insufficient, a penalty for delay in cooperation may be imposed; additional charges may be imposed for continued delays.
• Extended estimation powers:
  Persistent or serious lack of cooperation opens up further scope for estimation by the tax authorities, particularly in international matters and transfer pricing.
• Extension and intensification of the examination:
  Missing or delayed documents typically lead to longer audits, additional inquiries, and a critical review of internal processes and systems.
• Risk of tax-related criminal implications:
  In cases of significant deviations and insufficient cooperation, an initial suspicion of a tax offense or regulatory violation may arise (see Section 11 ApO), which regularly leads to the involvement of the fines and criminal proceedings office.

For practical purposes:
Taxpayers should fulfill their cooperation obligations. structured, on time and verifiable fulfilling these requirements. Particularly in international matters, clearly organized documentation (including transfer pricing documentation) is essential to avoid qualified requests for cooperation and subsequent sanctions.

Consequences for taxpayers during an external audit

From the taxpayer's perspective, several key consequences can be summarized:

1. Higher demands on tax processes and data quality
   The increased use of risk assessment systems and central databases (group directory, key figures, site overviews) increases the importance of consistent, audit-proof data.
2. More structure and commitment in the collaboration
   Framework agreements, qualified requests for participation and coordinated group audits do ensure greater predictability, but they also require effort. professional exam management on the company side.
3. Acceleration with a "sanction backdrop"
   The goal is a faster external audit. However, acceleration goes hand in hand with:
   • tighter deadlines,
   • clear participation requirements,
   • formal obligations to respond and financial sanctions for violations.
4. Stronger focus on cross-border issues
   The involvement of the Federal Central Tax Office (BZSt), control notifications regarding foreign relationships, and indications of unreported or incompletely reported cross-border tax arrangements increase the requirements for international tax compliance.

Impact of the draft bill on transfer pricing in external audits

The draft is particularly important for transfer pricing and internationally affiliated companies:

1. Group-wide review and group audit
   • Sections 14–20 ApO allow for a uniform, coordinated external audit from corporations and internationally affiliated companies.
   • The lead group auditor ensures that uniform tax assessment Group-wide issues – typically including transfer pricing questions.
2. Involvement of the Federal Central Tax Office (BZSt) in transfer pricing issues
   • The BZSt regularly takes on “self-contained examination topics”, which typically include Transfer prices, functional relocations, financing structures or IP structures.
   • This leads to specialized, centrally coordinated examinations at the federal level with high professional standards.
3. Risk-oriented case selection based on international procedures
   • Findings from international risk assessment procedures (e.g. from § 89b AO, joint audits or foreign audits) may be included in the selection.
   • Companies with conspicuous transfer pricing structures or differing results in international comparisons are increasingly coming under scrutiny.
4. Importance of transfer pricing documentation in the context of qualified participation
   • Transfer pricing documentation forms a core component the obligations to cooperate in internationally affiliated companies.
   • If required documents are not submitted in a timely or sufficient manner as part of a qualified request for cooperation, the following consequences may occur:
     • Compensation for delay in cooperation and surcharges,
     • increased estimation risks in transfer pricing,
     • Potential double taxation risks if corrections abroad are not tracked.
5. Acceleration and pre-structuring of disputes
   • Detailed audit reports and partial audit reports (§ 13 ApO) are intended to ensure that, particularly in the case of anticipated legal remedies, international dispute resolution or advance pricing agreements (e.g., mutual agreement procedures, advance pricing agreements), the facts are established. complete and clear is documented.
   • For transfer pricing, this means:
     Points of contention are identified early, documented and prepared for international proceedings – with immediate consequences for the group-wide tax structure.

In summary:
The draft bill strengthens the Audit depth and coordination in transfer pricing Clearly, companies with cross-border business relationships should adapt their transfer pricing systems, documentation, and internal governance to the new auditing practices at an early stage.

Conclusion

The draft bill for the external audit regulations (ApO) clearly pursues three objectives:

1. Modernization and standardization the rules for all types of external audits.
2. acceleration the external audit through timely audits, flexible audit periods, framework agreements and clear participation structures.
3. Strengthening risk-oriented auditing, particularly in the case of corporations and internationally affiliated companies – with a special focus on cross-border issues and transfer pricing.

For taxpayers, this means:
Who his Tax Compliance, the organization of the external audit and in particular the Transfer pricing documentation By setting up a professional structure, it can take advantage of the new opportunities for more predictable and efficient audits – while significantly reducing the risk of late payment penalties, intensive estimates and lengthy disputes.