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Tax
03. Dec 2025
StBin Sabine Rössler

New obligations under Section 153(4) of the German Fiscal Code - Extension of obligations to notify and to correct

Eine Reihe aufgestellter Dominosteine

Section 153 of the Fiscal Code (Abgabenordnung, AO) was already supplemented with a paragraph 4 with effect from 1.1.2025. The new rules extend the tax notification and correction obligations to matters that can have an effect above and beyond specific tax returns. In a departure from standard discrete period taxation, this legislation is the German government’s response to the increasing complexity of permanent tax circumstances and the close interrelationship between different types of tax.

The focus is on corrections to tax returns from various periods

The new rule requires taxpayers to notify and to correct, if the audit findings of an external audit also lead to changes to the assessment bases in different tax returns or in subsequent years. 

Practical example - In the course of a tax audit, it is ascertained that the useful life of an asset was set up incorrectly (e.g., 10 years instead of 15 years). In such a case, there is an obligation to also correct the depreciation and/or the tax returns for all the subsequent years.

The obligations under the new Section 153(4) AO affect the following two situations, in particular:

  • specific permanent circumstances, such as correcting the useful life of an asset, or other multi-year valuation approaches. An obligation to continue updating was introduced, under Section 153(4) AO, for matters relating to tax returns from various periods, for example, the findings from an external payroll tax audit that impact income tax. Section 153(4) AO thus requires the amendment of income or corporation tax returns.
  • If the findings from a tax audit can be regarded as new facts, then it may likewise be assumed that there is a notification obligation under Section 153(4) AO. It is possible that a notification obligation would not exist if the case constituted a different legal opinion, or a measurement issue. 
     

Please note

This would be on condition that the respective audit findings were implemented incontestably in tax assessment notices. An obligation would then only arise to also take the effects into account in other tax returns. 

Legal consequences in the case of a breach of the obligations

A failure to comply with the new obligations could have considerable consequences. Anyone failing to make the requisite notification or correction risks being accused of reckless understatement of tax (Section 378 AO) or tax evasion (Section 370 AO) owing to incomplete information. A breach of obligation can also be punishable with fines and, in major cases, may acquire criminal relevance.

We would like to highlight that there is legal uncertainty about the forms of culpability and knowledge in the case of Section 153(4) AO. There is a debate in the specialist literature as to whether positive knowledge of inaccuracies is necessary, or whether a cooperation obligation can already apply regardless of a deliberate inaccuracy.

Please note

For companies this means that, in the future, internal control mechanisms as well as the interfaces between various types of tax and assessment periods will need to be monitored more closely.

Practical implementation and recommendations for action

In practical terms, within the framework of external audits, we would recommend a proactive approach as follows:

  • Communicate at an early stage in the closing meeting - The new notification obligation should be actively addressed - in particular by companies that regularly undergo follow-up audits.
  • Documentation in the audit report - It would be advisable to record in the report those circumstances where there is no obligation to continue updating in subsequent years. In this way, it would be possible to avoid a subsequent discussion regarding liability.

Furthermore, taxpayers and consultants should check whether internal processes and compliance systems need to be adapted in order to meet the new requirements.

Temporal scope of application

Section 153(4) AO applies to tax audits where the announcement of the tax audit was made after 1.1.2025. Earlier audits do not fall under the new rules.

Conclusion

With the introduction of Section 153(4) AO the German government tightened up obligations to notify and to correct tax circumstances. In the future, there will be increased demands on companies to identify, document and continue updating findings across all audits. Tax departments should systematically monitor the interfaces in the company between audited and unaudited types of tax as well as taxation periods.

The new rules reinforce the compliance responsibility of taxpayers and stress the importance of systematic communication between tax auditing, tax consulting and internal tax functions.