How can a tax office's estimate be reduced?
Not by negotiating over the amount, but by attacking the precondition of the estimate. The tax office may only estimate in so far as it cannot establish or calculate the bases of taxation (§ 162 Abs. 1 AO, German Fiscal Code). Whoever shows that they can be established takes away not merely the result of the estimate but its foundation. Whoever argues about the amount has already conceded that estimating was permitted.
Concrete: the order
- First establish the deadline. Which deadline is running — objection under § 355 Abs. 1 Satz 1 AO, preclusion under § 79b Abs. 3 FGO? Everything else is moot once the deadline has passed.
- Then examine the power, not the amount. Does the report state an established defect — and does it touch substantive accuracy (§ 158 Abs. 2 Nr. 1 AO)? Without that there is no power to estimate whose amount could be discussed.
- Narrow the scope. Does the defect concern the whole business or a part of it? Estimation is permitted only in so far as the bases cannot be established (§ 162 Abs. 1 Satz 1 AO) — not across the board.
- Name the method. Time-series comparison, official margin tables, 30/70 calculation: each procedure has its own preconditions, and each precondition is a point of attack in itself.
- Draw up your own calculation in full. Not sample against sample — that merely relocates the dispute. In full means: the entire audit period, every figure traceable to a document.
- Include what is unfavourable. What speaks against you, the other side will find anyway. If it stands in your own statement, it is evidence of that statement's care; if it is missing, it is evidence against it.
“The tax office has estimated too high” — why that is the wrong opening
The amount is the result, not the cause. An estimate is built from two parts: a power and a method of calculation. Both are open to attack, and both more effectively than the result. As long as the dispute is about the figure, you are moving inside the tax office's own calculation — and whoever moves inside someone else's calculation can at best obtain a discount.
The points of attack and their sources
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.
| Point of attack | German legal basis | What follows from it |
|---|---|---|
| The power | § 158 Abs. 1 AO | Accounts complying with §§ 140 to 148 AO shall be taken as the basis of taxation. Without an established defect there is no power to estimate. |
| The scope | § 162 Abs. 1 Satz 1 AO | Estimation is permitted only in so far as the bases cannot be established or calculated — not across the board for the whole business when only a part is affected. |
| The method | § 162 Abs. 1 Satz 2 AO | All circumstances of significance for the estimate must be taken into account. An extrapolation from a handful of parameters leaves circumstances out. |
| The duty to investigate | § 88 Abs. 1 Satz 2 AO | The authority must take into account circumstances favourable to the parties as well. An audit that gathers only what is adverse misses its statutory task. |
| The counter-evidence | § 96 Abs. 1 Satz 1 FGO | The court decides from the overall result of the proceedings. What you submit is part of it — and may not be passed over. |
| The deadline | § 79b Abs. 3 FGO | Evidence submitted late may be rejected. The timetable helps decide the outcome. |
What works in practice
The strongest instrument is your own, complete calculation. It deals with both points of attack at once: it shows that the bases can be established — which removes the power under § 162 Abs. 1 AO — and it takes all circumstances into account, which the authority's method as a rule does not. Completeness is what matters: setting one sample against another merely relocates the dispute.
And what rarely works
The assertion that the estimate is “too high”, with no figures behind it. A reference to poor trading years without documents. And the attempt to agree on an amount before the question of the power is settled — because that concedes it in silence.
What we contribute
We record every incoming invoice of the audit period, store the recipe for every product and calculate from that the quantity actually produced and sold. Every figure leads back to a document, every calculation step is disclosed. And we tell you at the outset which deadline is running and what can be gathered before it expires.
Measured against Europe’s strictest standard
Requirements for counter-evidence — this standard is not equally high everywhere. It is at its strictest where it reads: Where the burden of proof is reversed, the taxpayer must DEMONSTRATE that the assessment is incorrect. Making it plausible is not enough (Algemene wet inzake rijksbelastingen, Art. 27e lid 1, Netherlands).
The calculation is complete rather than a sample, every figure traceable to a document and recalculable as a whole — it does not assert, it proves.
In our register this axis is recorded as exceeded in 24 of 24 documented legal orders. The assessment is ours and can be read country by country with its source — it is not a third party’s certification.
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.