„Fiscalisation: New cash registers for retailers in Germany?“
POSTED ON 10. DECEMBER 2019 BY DAVID KRUSE
Fiscalisation will come into force in Germany on 01.01.2020.
The primary objective of this measure is to curb the generation of black money by documenting each transaction that has occurred. In a letter from the Federal Ministry of Finance dated 06.11.2019, it was announced to the contrary that merchants would be granted a further period of grace until 30.09.2020. The letter describes that merchants without an installed technical safety device for documentation purposes, do not have to fear any penalties until the deadline expires. Despite this transitional period, fiscalisation raises more questions than answers for merchants. In particular, it has not been fully clarified how the implied changeover will take place, what rules will apply and what will happen in the event of non-compliance. For this reason, the following blog article addresses the most persistent myths and subsequently deals in depth with the subject of fiscalisation.
The cash register obligation comes to Germany!
Fiscalisation and the associated “Cash Register Anti-Tampering Ordinance” (KassenSichV) are not to be confused with a cash register obligation. An obligation does not exist in Germany and is currently not planned, since the administrative expenses caused by this would be disproportionate from a cost-benefit point of view and it would involve a considerable high administrative burden. This applies in particular to weekly markets, community/club festivals or farm shops and street vendors as well as to persons who do not offer their services at fixed locations. Moreover, exceptions would not be legally definable. Thus, the range can go from an open cash register, through a mechanical cash register up to an EDP cash register.
I need to buy a new cash register!
Reality: If the cash register has been purchased later than 25.11.2010 (§ 30 Abs. 3 zu Art. 97 EGAO), GoBD compliant and cannot be upgraded, a transitional period until 01.01.2023 applies. If the cash register can be upgraded, the upgrade has to be done by the cash register system manufacturer accordingly.
Certified cash register system: Cash registers must be certified from 01.01.2020!
No, only the technical safety device / software must be certified. This device consists of a security module, which logs the cash register entries at the beginning of a recording process to prevent subsequent manipulation, a storage medium, which stores the individual records for the duration of the statutory storage obligation, and a holistic, digital interface to ensure smooth data transmission for auditing purposes. As already mentioned at the beginning, despite the entry into force of the KassenSichV, for the time being there will be no sanction for violations of implementation.
The KassenSichV comes into force on 01.01.2020?
Yes, the KassenSichV will officially come into force on 1 January 2020. However, the letter published by the Federal Ministry of Finance dated 06.11.2019 shows, that recording systems within the meaning of §146 of the Fiscal Code (Abgabenordnung, AO) which do not have a technical safety device will not be objected to until 30.09.2020. This also means that the digital interface of the fiscal administration for cash register systems (DSFinV-K) published in August 2019 is not applicable.
What exactly is a fiscalisation? Am I GDPdU and GoBD conform and what has the paragraph §146 AO to do with it? Do I have to buy a new cash register/tablet or even exchange my hip cash register system in a slim design into one of the chunks from the old days?
Computers and the associated possibilities are part of everyday life today. This also applies to the electronic processing of data. In the course of the last century, systems for bookkeeping reconverted from their original, paper-based version to electronic systems for bookkeeping. Unfortunately, these electronic accounting systems have often been misused to allow unverifiable manipulation of sales data and the related evasion of taxes and social security contributions. In order to limit this evasion, in the 1980s the first data carriers were utilized to store sales data. The resulting process, aimed at storing sales data and thus the public treasury, became known as fiscalisation.
Almost 40 years after the first fiscal storages were used, a comprehensive ordinance, the so-called KassenSichV, should be developed and enforced for the electronic cash register landscape. The fiscalisation of electronic cash registers and their requirements serves exclusively to fight merchants who process funds tax-free and thus gain a competitive advantage over those who declare their sales turnover properly. This topic has special relevance, since current cash register systems have back doors installed, which can be exploited by users. Multiway, a cash register system manufacturer mainly for Asian restaurants that apparently made it possible to cancel booked items in order to evade taxes, caused quite a stir with this function in early 2019. In some cases, the will to evade taxes goes so far that customers only purchase a new cash register if it allows the cancellation of transactions without evidence. Thus, a state regulation – which would not have been necessary if the manufacturers of cash register systems had consistently complied with the regulations – would not only reduce potential black money but also eliminate the financial advantage of evading merchants.
In order to gain a better insight into the forthcoming fiscalisation of the German cash register landscape and its requirements, some terms such as GoBD, Kassensicherungsverordnung or §146 AO must be clarified.
The GDPdU or “Regulation on data access and auditability of digital documents”, which came into force on 01.01.2002, for the first time held the tax payer accountable by contributing to an administrative regulation. As a result, merchants had to archive all tax data for 10 years and make it available to the tax authorities during an audit if required. On 01.01.2015 the GDPdU was replaced by the GoBD. The GoBD or “Principles for the proper keeping and storage of books, records and documents in electronic form as well as for data access”, contains as administrative regulation that an immutability of the data must be given. In addition, the individual recording obligation as well as the possibility of data export in a predefined format belong to the general principles of the GoBD. The simple storage of cumulative shift sales in the form of so-called Z-reports, i.e. the day-end closing reports at the cash registers, is not sufficient. Compliance with the directive on protection against manipulation must be guaranteed by the cash register manufacturers. However, actual control lies with the competent tax offices. In this context relevant, neither the GDPdU nor the GoBD have the enforceable effect of a regulation, since only the principles of orderly bookkeeping (GoB) are regulated in the Fiscal Code. Due to the fact that the Ministry of Finance has not made a clear statement as to which criteria an electronic cash register must meet in order to be compliant, the GoBD does not necessarily offer legal certainty.
In contrast to GDPdU and GoBD the KassenSichV is a regulation of the Finance Ministry which prescribes as obligatory new standards for the prevention of manipulations at cash registers. The KassenSichV of 26.09.2017 is based on the Act on Protection against Manipulation of Digital Basic Records from 16.12.2016. From 01.01.2020 onwards, cash registers in Germany whose design permits it technically must be equipped with a so-called technical safety device (TSD). The security device stores the transactions of the cash register in its internal memory and returns a code to the cash register. This code shall be printed on each sales receipt. The data must be stored in a protocol that can be exported by the tax office. Cash registers purchased between 25.10.2010 and 31.12.2019 which cannot be upgraded may be renewed until 31.12.2022.
Although the terminology has now been clarified, the question of legal enforcement and the consequences for merchants in the event of non-compliance remains. The regulations for reviewing transaction data states that a cash auditor may enter the shop unannounced during normal business hours and observe the use of the cash register (no identification requirement; keyword test purchase). In addition, the auditors may require the management (or a qualified representative) to conduct a cash check (ID card requirement). In addition to business premises, this also applies to sales vehicles, e.g. food trucks. If the audited records are not sufficient, an external audit may be ordered. Anyone who concludes after this vast amount of information “Fair enough, but what happens if I continue as before and in the worst case pay a fine” should be warned at this point. If non-compliant cash register systems (including security devices) are used, the merchant may be fined with up to 25,000 euros.
The aim of the KassenSichV is to determine and prevent the subsequent manipulation of sales data. Here, the audit is conducted based on the export of the cash register journal as well as evaluation data, programming data and master data change data, which is examined by a software of the tax offices. The necessary technical safety equipment consists of a safety module, a storage medium and a digital interface, which enables the export to be read out. In the future, documents from compliant systems will have a continuous signature including unique information from the previous document/receipt. This signature is stored encrypted in a security module and can therefore not be changed. If the chain of signatures is interrupted, you can quickly find out where a manipulation took place. This module must be accessible consistently, since communication between the cash register and the security module takes place not only during signature creation, but also when articles are entered. Due to this constant accessibility, there is a clear implication that cloud-based cash registers may no longer be able to work offline from 01.01.2020 onwards, if this results in an interruption of communication with the module. For this reason, contact should be sought with the cash register system manufacturer, as the latter must provide the solution or software for his system.
With this short summary of the not entirely new idea of German fiscalisation and the answering of the most important questions, the question remains with regards to the conclusion. There is no dispute that Germany is a country with an affinity for cash. It is also not disputed that not every euro is properly documented with the tax authorities. However, the question remains as to whether the implementation via new cash register systems is really the solution to the problem of tax evasion or whether it does not even create others. What are the implications of paper-based receipts in an increasingly ecological society? Is it appropriate to establish a closed standard in an open source working community? Is the tax money evaded in the form of cash really reduced by the defined exceptions?
These questions have not yet been answered. What is certain is that the law, which will come into force in January 2020, will remain ineffective if standards are not clearly defined and enforced by an adequate number of auditing personnel.
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