Coercive Penalty Notice or Estimated Tax Assessment from the German Tax Office?

If the German tax office has threatened a coercive penalty or issued an estimated tax assessment, prompt action is usually required.

SKD Tax Advisory assists businesses and self-employed professionals throughout Germany with overdue tax filings, missing accounts, estimated assessments and communication with the tax authorities.

We also accept suitable time-sensitive engagements where several tax years are outstanding or immediate action is required.

When the Tax Office Has Already Taken Action
A Zwangsgeldandrohung is a formal notice threatening a coercive penalty if a required filing or other obligation is not completed within the deadline set by the tax office.

A Schätzungsbescheid is a tax assessment based on figures estimated by the tax office because the information required to determine the actual tax liability has not been provided.

Typical situations include:

tax returns are outstanding for one or more years
business tax returns have not been filed
annual financial statements or EÜR profit calculations are missing
the tax office has estimated taxable income or business profit
the estimated figures have resulted in substantial tax liabilities
appeal or response deadlines are already running
accounting records and tax filings need to be brought up to date for several periods

For a business, outstanding obligations can quickly affect several taxes and several assessment periods at the same time.

What Needs to Be Established First
Before deciding how to proceed, we determine exactly what is outstanding and which deadlines require immediate attention.

This includes questions such as:

Which tax returns or financial statements are missing?
Which assessments have already been issued?
Which deadlines are currently running?
Is an appeal or another procedural step required?
Which accounting records still need to be completed?
What information and documentation is already available?
Which tax years and types of tax are affected?

This provides the basis for deciding which matters need to be dealt with first.

How We Can Assist
Depending on the circumstances, our work may include:

reviewing notices, coercive penalty warnings and tax assessments
checking current deadlines
communicating with the German tax office
preparing and filing appeals where appropriate
completing outstanding tax returns
preparing missing annual financial statements or EÜR profit calculations
bringing accounting records for earlier periods up to date
reviewing estimated taxable amounts
preparing the information required to replace estimates with actual figures
coordinating business and personal tax returns where necessary
establishing a workable structure for future tax compliance

The objective is to resolve the outstanding matters properly and restore a reliable basis for ongoing tax compliance.

Reviewing an Estimated Tax Assessment
If the tax office does not have sufficient information to determine the correct tax liability, it may estimate the relevant taxable amounts.
Those estimates do not necessarily reflect the actual financial position of the business.
Where an estimated assessment has already been issued, we review the figures used, the procedural position and the tax filings that are still outstanding.

Once the underlying accounting and tax information has been completed, an excessive estimate may be replaced or corrected on the basis of the actual figures, depending on the procedural position of the assessment.

An estimated assessment does not normally remove the obligation to submit the outstanding tax return.

Where several years are affected, the individual periods and taxes therefore need to be dealt with in a structured way.

Outstanding Tax Returns and Financial Statements
For businesses and self-employed professionals, a backlog often involves more than a single tax return.

Outstanding work may include:

personal income tax returns
corporate income tax returns
trade tax returns
VAT returns
separate and uniform determination returns
annual financial statements
Einnahmen-Überschuss-Rechnungen (EÜR)

Where relevant, we also take account of the personal tax position of the business owner, self-employed professional or shareholder.

Rental income and other more substantial private tax matters may also need to be included where they form part of the same overall tax position.

When Several Years Need to Be Brought Up to Date
Where tax returns, accounts or financial statements are outstanding for several years, the first step is to establish what information is available and what work still needs to be completed.

We organise the outstanding periods, identify the documents required and determine a sensible order for completing the work.

Relevant factors may include:

current deadlines
assessments already issued
the amount of tax currently being demanded
outstanding accounting and financial statement work
the financial significance of the individual matters

This makes it possible to deal with a substantial tax backlog systematically rather than treating each notice in isolation.

Taking Over a Time-Sensitive Engagement
A change of tax advisor is not always planned well in advance.

There may already be an urgent need for action because deadlines are running, tax returns are outstanding, estimated assessments have been issued or the tax office has announced further enforcement measures.

SKD Tax Advisory accepts suitable time-sensitive engagements throughout Germany, provided that the work can be handled properly within the available capacity.

For an initial assessment, we will normally need::

the latest letters and assessments from the tax office
an overview of the tax years and taxes affected
details of any current deadlines
available accounting and financial statement data
information about any appeals or other procedural steps already taken

This allows us to assess what needs to be done and which matters require priority.

Digital Support Throughout Germany
SKD Tax Advisory works digitally with clients throughout Germany.

Documents and accounting records can be provided electronically, and meetings can be held by video or telephone.

Where instructed, we also communicate directly with the German tax authorities on your behalf.

This allows time-sensitive tax matters to be handled without the need for an in-person meeting.

After the Backlog Has Been Resolved
Resolving overdue filings does not necessarily have to be the end of the engagement.

After a substantial backlog has been cleared, it may make sense to place financial accounting, payroll, tax returns and annual financial statements on a regular and reliable footing.

The aim is to move from an urgent tax problem back to a structured ongoing advisory relationship.

Have You Received a Coercive Penalty Notice or Estimated Tax Assessment?
If deadlines are already running or several tax years are affected, please mention this when you contact us.

It is helpful to tell us:

which notice or assessment you have received
which tax years are affected
whether the matter concerns a business, self-employed activity or another tax matter
which taxes are involved
which deadlines are currently running

This enables us to assess at an early stage whether and to what extent we can assist.
Contact SKD Tax Advisory if you need support with a Zwangsgeldandrohung, an estimated tax assessment or overdue tax filings in Germany.