The new standard
The main features of the Cash Register Anti-Tampering Ordinance (KassenSichV)
The ‘Principles of Proper Keeping and Retention of Accounts, Records and Documents in Electronic Form’ (Grundsätze zur ordnungsmäßigen Führung und Aufbewahrung von Büchern, Aufzeichnungen und Unterlagen in elektronischer Form, GoBD) basically also cover accounting for cash transactions. However, given that the GoBD are administrative regulations, previously there was no legal certainty and, thus, no common applicable standard. The additional KassenSichV will now ensure that transaction data will be stored in a tamper-proof way and archived in accordance with the retention periods and that this data can be forwarded to the local tax office in the new standard data format (DSFinV-K).
The Anti-Tampering Ordinance also provides for the mandatory retrofitting of all cash registers with a technical security system (TSS). From now on, among other things, there will be clear rules on the mandatory information on the receipt, such as, for example, the serial number of the cash register or TSS, a verification code as well as the transaction signature, and a requirement to issue a receipt. This means that retailers have to issue their customers with a till receipt for every sale. This has to be either printed out or generated electronically. Whether or not the customer also actually takes the receipt is not important here.
Please note: Once a new TSS has been installed then – probably from September 2023 – the competent tax office will have to be notified of this and the following information provided: taxpayer’s name and tax number, serial number and location of the cash register as well as the date of its purchase or shutdown, or something similar.
The key role of the DSFinV-K format
The standardised DSFinV-K format plays a key role in the new KassenSichV provisions; since 1.1.2020, it has been mandatory for all cash register users to provide this format for inspections of cash register data by the local tax office. In this regard, up to 31.3.2021, there was still a transition period or no objection arrangement during which all operators were retroactively given the opportunity to retrofit their systems accordingly. Up to now, extended exemptions applied for cash registers that could not be retrofitted – these expired on 31.12.2022.
Please note: The advantage of DSFinV-K is the standardised audit that can be performed by the local tax office; the audit tool that is used for this is IDEA software with a specially integrated interface for DSFinV-K data. Submitting data in the new format will now ensure that a comprehensive and consistent audit is possible.
A DSFinV-K data export is divided into three blocks:
- The first block consists of the individual recording module that comprises the receipt header as well as the individual receipt items.
- The master data module, as the second block, comprises all the necessary information about the master data, e.g., locations, cash registers as well as VAT data.
- Subsequently, the third block, in the form of the cash register closing module, consists of all the information on payment methods, types of business transactions or currency data.
However, at all the stages, the transaction should be clearly defined as a record and shown with the corresponding net and gross amounts or tax legend so that it is possible to perform a proper reconciliation of all the stages.
Recommendation: It should be possible to clearly separate any incoming or outgoing payments, opening balances or money transit that are not attributable to the transaction. Furthermore, for every transaction there has to be detailed documentation explaining what exactly is behind it.
Stumbling blocks related to accounting for cash transactions
Reconciliation with the financial accounts
For companies, an important step in the run-up to a potential cash register inspection is a detailed analysis of the cash register data in order to ensure that the cash transactions are being correctly recorded in accordance with common conformity standards and tax principles. Broadly speaking, here there are three approaches to a review.
- The first step is a pure cash register data analysis that focuses on reconciling the individual tables with each other.
- If it can be ascertained that the cash register data are in themselves consistent and reliable then, subsequently, they can be divided up into gross sales, net sales and the tax amount.
- For a detailed reconciliation with transactions in the financial accounts it would then make sense to split them up for each branch, tax rate or on a monthly basis.
Splitting them up in this way will make it possible to have an initial insight into any potential anomalies that occur when the data are transferred from the cash register to the financial accounts. The first stumbling block often already appears here. Master data are frequently not maintained and the reconciliation with the cost centres in the financial accounts will fail because a clear allocation via the master data is not possible. It is also often the case that products are incorrectly taxed – particularly as a result of changes in tax rates, for example, during the COVID-19 crisis – and thus the data on the receipt will differ from the transactions recorded in the financial accounts.
Please note: Here, when accounting for cash transactions, it is vital that internal controls are regularly performed and checks are carried out to determine whether or not the information on the receipt matches the information in the financial accounts.
Reconciliation with the merchandise management system
During the pandemic phase, the VAT rate applicable to restaurants and the food service industry, pursuant to Section 12 of the German VAT Act, for both takeaway purchases as well as on-site food and service was levelled down to 7%. Drinks were excluded from this concession in order to avoid a disparity with respect to retailers. This provision was supposed to expire on 31.12.2022 but it was extended once again until 31.12.2023 on account of the effectively smooth transition from the COVID-19 crisis to the Ukraine crisis. The aim is to subsidise this sector by means of this extension in view of the increased energy prices.
This issue also plays a major role with regard to reconciling the merchandise management system used by a company and the cash register transactions that it generates. This is because the constant changes on the part of lawmakers could mean that, here, different information is input into the merchandise management system and the cash register. For example, in the context of a cash register data analysis, besides incorrectly taxed products and wrongly issued receipts, you can currently also frequently find incorrect merchandise category assignments, varying tax rates within a single merchandise category and even a complete lack of data on merchandise categories in the cash register data.
Recommendation: Such information gaps and, in particular, incorrect data on tax rates per product or merchandise category could result in heavy additional charges for a company and should therefore be detected as quickly as possible and rectified in order not to be exposed to any unnecessary complications in the event of a potential cash register inspection.