What is a qualified recalculation?
“Qualified recalculation” is a term neither of the statute nor of case law. It has established itself in practitioners' language for what the German Federal Fiscal Court requires in other words: a recalculation must be appropriate and must lead to reasonable results corresponding to reality (BFH, order of 20 January 2022 – X B 132-133/20). Where it does not, it does not carry an add-back — and that is where the dispute is decided.
Concrete: where an auditor's calculation is regularly open to attack
- Ask about the bases first, not the result. Under BFH X R 20/13 the specific data and the investigations that led to the result must be disclosed. If the answer stays general, the calculation lacks the basis against which it would be measured.
- Check the period the mark-up rates come from. A rate from one year applied to four assumes constant conditions. Price changes, changes of range and altered purchasing terms are documentable facts — and each of them sets the assumption aside.
- Look at how the product groups are cut. The coarser the group, the more the average rate does the work. If a group combines goods with clearly different mark-ups, the Federal Fiscal Court's condition — approximately equal rates — is not met.
- Watch what does not enter the calculation. Own consumption, staff meals, wastage, breakage, reprocessing into other products, items that generate no revenue: what is missing here raises revenue arithmetically without any transaction behind it.
- Ask for the cross-check against stock. A calculation that only runs forwards can always be disputed. Only when purchase, recipe, production and sale agree through the movement of goods does the circle close.
- Draw up your own calculation in full, not as a sample. Sample against sample merely relocates the dispute. In full means: the whole audit period, every figure traceable to a document — and the unfavourable findings included.
Why the word itself is already a point of attack
A recalculation works back from goods input to revenue. It is therefore itself an estimate — yet it is meant to prove that estimating is permitted. That double role is the reason for the high requirements: as early as 1981 the Federal Fiscal Court recognised the recalculation as being in principle capable of showing the inaccuracy of formally proper accounts (BFH, judgment of 17 November 1981 – VIII R 174/77, BStBl II 1982, 430) — and in the same breath required the mark-up rates to be documented so that they can be verified, and disclosed where necessary. Whoever searches for the catchphrase is in truth searching for those conditions.
What a recalculation must be measured against
The provisions in this table are German law. Most European legal orders know the same principle — set out verbatim and by country in the register of legal bases.
| Requirement | Source | What follows from it |
|---|---|---|
| It must be appropriate | BFH X B 132-133/20 | Order of 20 January 2022: the recalculation is a recognised plausibility method — but only where it takes the individual conditions of the business into account and leads to reasonable results corresponding to reality. |
| The bases must be disclosed | BFH X R 20/13 | Judgment of 25 March 2015, BStBl II 2015, 743: what must be disclosed are the calculation bases, the specific data, the results and the investigations that led to them. A calculation that cannot be recalculated is not one. |
| Mark-up rates must be verifiable | BFH VIII R 174/77 | Judgment of 17 November 1981, BStBl II 1982, 430: where the auditor cannot rely on the taxpayer's own information, he must document how the mark-up rates were determined and disclose it where necessary. |
| Product groups must not be too coarse | BFH VIII R 174/77 | It is permissible to combine goods with approximately equal mark-ups into one group and form a weighted average per group — approximately equal is the condition, not the wish for a round number. |
| Without the power the best calculation is useless | § 158 Abs. 2 Nr. 1 AO | Accounts shall be taken as the basis of taxation in so far as there is no cause to object to their substantive accuracy. The recalculation is meant to create that cause — it may not presuppose it. |
| Estimation only so far as necessary | § 162 Abs. 1 Satz 1 AO | Only in so far as the bases cannot be established or calculated. What can be calculated is beyond the reach of estimation — even where a calculation exists. |
What the word “qualified” means in practice
What is meant is the distinction from a rough plausibility check: a calculation that does not work with flat-rate margin figures but with the data of the actual business — its own recipes, its own purchase prices, its own selling prices, its own movement of goods. That is not a higher grade of the same method but a different data basis. And because the data come from the business itself, they are documentable — by both sides.
What can speak against your own position
According to the case law a technically sound recalculation is one of the stronger plausibility methods. If it comes out against you and withstands the requirements set out above, it does not become weaker by being disputed. It is better to know that early: we say in advance whether a counter-calculation will hold — including when the answer is no.
What we contribute
We record the complete goods input of the audit period — not a selection — store the recipe for every product and carry the proof through purchase, recipe, production, sale and back through the movement of goods. Every figure leads to a document, every calculation step is disclosed, and we ourselves propose that the result be examined by a court-appointed expert. The appraisal stays with the court.
How calculation and stock control are checked against each other →
The legal provisions reproduced here are for information and do not replace legal advice. For application in an individual case the legal position at the time of the proceedings must be examined by a lawyer admitted in the country and field concerned.