Germany Plans New VAT Reporting, Longer Record Retention and Local Data Storage

Germany’s Federal Ministry of Finance and Federal Ministry of Justice have presented a joint action plan aimed at strengthening the fight against tax and financial crime. The plan includes three measures that could significantly affect VAT compliance, document retention and the storage of tax-related data.

The first proposal is the introduction of a new VAT reporting system intended to improve the detection and prevention of VAT fraud. The authorities have not yet published details about its technical structure, scope or implementation timeline.

However, the proposal may indicate that Germany is considering a near real-time, invoice-level reporting model similar to systems being introduced in other EU countries. Germany’s ongoing mandatory B2B e-invoicing rollout could potentially provide the technical foundation for such a reporting system.

The second measure would extend the retention period for accounting documents from 10 to 15 years. The goal is to ensure that tax authorities have access to relevant evidence for a longer period during fraud investigations.

It is not yet clear whether the 15-year period would apply to all accounting records currently covered by German retention rules or only to specific categories of documents. The authorities have also not clarified whether the new period would apply only to newly created records or also extend the retention deadline for existing documents.

The action plan also proposes that companies store copies of tax-relevant data on mirror servers located in Germany. This would introduce a new data-localisation requirement.

Further clarification is needed on whether the mirror server would have to contain a continuously synchronised copy of the data or whether periodic backups would be sufficient. The exact types of tax-related data covered by the requirement have also not been defined.

For now, all three measures remain policy proposals. No draft legislation, implementation dates or detailed technical requirements have been published. Businesses should therefore monitor future legislative developments before making changes to their VAT reporting, archiving or data-storage systems.