E-Tax Balance Sheet trial period begins 1 February 2011

All German companies with double-entry accounting will need to submit – most likely for fiscal years starting after 31 December 2011 – an electronic tax balance sheet and an electronic profit-and-loss account (“E-Tax Balance Sheet”) as an appendix to their electronic tax returns. As from fiscal year 2011, all corporate income tax returns must be submitted electronically. No changes have been announced for tax assessments, which will still be issued only in hard copy.

On 30 August 2010, the German Federal Ministry of Finance (BMF) released a first draft of the general taxonomy applicable for most companies. On 18 January 2011, the BMF announced that first drafts of special taxonomies will be published by the end of February (for banks) and the end of March (for insurance companies). By the end of April 2011, first drafts of all other special and complementary taxonomies (applicable to other industries subject to special accounting rules and/or regulations) will be published.

On 18 January 2011, Deloitte Germany – representing clients who have already signed up – attended a kick-off meeting on the E-Tax Balance Sheet trial period organized by the BMF, which provided more insight into the trial:

• Beginning 1 February 2011, the BMF will hold a voluntary three-month E-Tax Balance Sheet trial period. 
• Data submitted during the trial will be handled by a special department and will not be shared with the tax offices. Submissions will be made using a special “test taxpayer ID number”. If the submitter does not inform the special department of a “transfer ticket number” (generated by the accepting software), all data will be deleted automatically. For review purposes, the BMF has asked participants to also submit trial balances so that the submitted trial E-Tax Balance Sheet can be reviewed for completeness. 
• All participants will receive an evaluation questionnaire requesting information on the time required for manual or electronic filling of the data sheet, problems related to data content (e.g. accounts not available, technical issues that cannot be entered) and any technical data submission issues. 
• The BMF has confirmed that the tax authorities will only allow their own client software ("ERiC") for E-Tax Balance Sheet data submission and will not provide a manual data entry tool (for the trial period or going forward). Some software companies have announced that they will not offer updates (allowing for electronic submission) and will not provide manual data entry tools (allowing for manual data transfer into a tool allowing for electronic submission) for trial period participants. 
• The BMF will review the feedback received and technical issues reported during the trial period and is still hopeful to officially introduce the E-Tax Balance Sheet for all fiscal years starting after 31 December 2011.

All German companies should review their readiness for the E-Tax Balance Sheet during 2011 and should plan to address changes to software, accounting systems, charts of accounts and internal processes.

Deloitte Germany can advise on all E-Tax Balance Sheet questions and can offer practical solutions for all E-Tax Balance Sheet issues. Please contact us (gtln@deloitte.de) if you wish to receive a more detailed E-Tax Balance Sheet flyer.