Germany Announces Action Plan Including VAT Reporting System and AI-Based Tax Fraud Detection

Germany's Federal Ministry of Finance and Federal Ministry of Justice have announced a joint action plan to strengthen the country's response to tax and financial crime through increased data sharing, digitalisation and enhanced fraud detection.

The plan includes the introduction of a VAT reporting system to help prevent VAT fraud, alongside the creation of a new data analysis centre and a central tax data platform.

According to the government, the data analysis centre will be established in cooperation with Germany's federal states, enabling cross-agency access to tax data. Tax information will be consolidated on a central platform, while AI-powered analytical tools will be developed to identify patterns in financial data.

The action plan also proposes the establishment of a Joint Centre against Tax and Financial Crime within the Customs Service to improve coordination between federal and state tax investigators and customs financial investigators.

Other measures affecting businesses include extending the retention period for accounting documents to 15 years, requiring companies to store tax-relevant data on mirror servers in Germany, and introducing a mandatory electronic cash register system to help prevent tax fraud in cash-intensive sectors.

The proposals form part of a broader programme to modernise the tax administration, strengthen cooperation between authorities, and increase the detection and prosecution of tax and financial crime.

Source: Federal Ministry of Finance

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