Art. 153 (4) AO – New risk or business as usual?

As of January 1, 2025, the legislator has extended the notification and correction obligations for taxpayers. If a tax audit makes findings and these findings are implemented incontestably in notices, the other tax returns must be checked for possibly required corrections because any audited facts extend to these unaudited tax returns. According to the legislator, the new regulation in Art. 153 (4) AO is intended to speed up tax audits, especially for companies that are subject to a follow-up audit (see also the news article Accelerated tax audit). 

Content of the new regulation

Art. 153 (4) AO now expressly standardizes a notification and correction obligation if a notice is amended following a tax audit and the notice becomes incontestable. As a result, taxpayers must check whether the same facts also play a role in unaudited returns. According to the wording of Art. 153 (4) AO, the obligation to notify and correct extends to all “facts underlying the audit findings”. It is therefore generally agreed that the provision covers specific, individual permanent circumstances, such as an asset’s useful life in the context of depreciation and amortization.

However, it has not been decided whether the new regulation can also be extended to similar or comparable situations. There are good reasons to reject such an extension. Such an interpretation exceeds the limits of the wording of Art. 153 (4) AO and contradicts the legislator’s intention.

This leaves only two cases in which Art. 153 (4) AO is relevant:

1. Permanent circumstances extending beyond the audited period and affecting tax types from the tax audit. 
2. Circumstance that also have an impact on non-audited tax types and periods.

Temporal scope of application

The new Art. 153 (4) AO’s temporal scope covers taxes, tax refunds and separate assessments of tax bases for which an audit notice pursuant to Art. 196 AO was announced after December 31, 2024, as well as all taxes and tax refunds arising after December 31, 2024.  

Distinction from Art. 153 (1) AO  

Unfortunately, the explanatory memorandum is silent on the question of how the correction obligations in Art. 153 (1) sentence 1 no. 1 and (4) AO interact. The new provision could apply primarily to findings from tax audits, or it could apply in addition to the existing general obligation to notify and correct declaration errors. It would also be possible to interpret the factual requirements of the general correction obligation into the new regulation, in particular to make a correction obligation dependent on the taxpayer “recognizing” their error. It remains to be seen how case law and tax authorities will apply the standard in practice. However, as long as the interpretation of the new regulation remains unclear, caution should be exercised:

Implications of Art. 153 (4) AO under the law regarding fiscal offenses

The breach of a tax notification and correction obligation can constitute intentional tax evasion or reckless understatement of tax (Art. 370, 378 (1) AO). 

Recommendations for practice

The new regulation requires an in-depth examination of the results of tax audits and a review of their effects for other periods and tax types. 

In the corporate sector, this also entails the need to review and update existing tax compliance management systems with regard to the requirements and to include the documented evaluation of audit reports and any necessary notification and correction obligations in such systems.  

Due to numerous remaining uncertainties and existing risks of sanctions, it should be closely monitored how the tax authorities and case law interpret and apply the provisions of Art. 153 (4) AO. It may also be advisable to openly address possible ambiguities regarding the notification and correction obligation towards the tax authorities during the final meeting (Art. 201 (1) AO). In the case of unclear issues, expert advice should be sought at an early stage in order to identify and exclude possible risks as best as possible. If the tax auditor’s opinion should not be followed in the next tax returns, it is advisable to at least disclose and explain the approach and reasons.