Bundeszentralamt für Steuern

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Joint Audit (direct taxes)

Note: The Act to Strengthen Growth Opportunities, Investment and Innovation as well as Tax Simplification and Tax Fairness (Growth Opportunities Act, in German: Wachstumschancengesetz) of 27 March 2024 (Federal Law Gazette I 2024 No. 108) revised the German rules for international simultaneous and joint tax audits, among other things. Some of the information contained below on this website no longer corresponds to the current legal framework. It will be revised shortly.

The term "Joint Audit" refers to coordinated bilateral or multilateral tax field audits (controls) which are conducted within the framework of mutual administrative assistance in tax matters. They stand alongside other instruments, i.e. the exchange of information on request, the spontaneous exchange of information and the automatic exchange of information. In a coordinated international audit tax administrations from at least two countries agree to audit one or more related taxpayers which are of common or complementary interest with regard to tax circumstances or cross-border transactions. A coordinated audit can be done by a simultaneous or a joint audit both in the field of direct taxes. Internationally the terms "multilateral control" (MLC) or "joint audit" are commonly established to describe such procedures, the latter is used in the following text.

The Act to Strengthen Growth Opportunities, Investment and Innovation as well as Tax Simplification and Tax Fairness (Growth Opportunities Act, in German: Wachstumschancengesetz) of 27 March 2024 (Federal Law Gazette I 2024 No. 108) revised the German rules for international simultaneous and joint tax audits, among other things. Some of the information contained below on this website no longer corresponds to the current legal framework. It will be revised shortly.

Legal bases

The legal bases for Joint Audits between EU Member States are the Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and its implementation into national law, the EU Administrative Assistance Act (EUAHiG) of 26 June 2013. These provisions are complemented by Section 117 German Fiscal Code (AO).

In addition, cooperation through Joint Audits with almost all third countries (non-EU countries) is carried out on the basis of Article 26 of the respective Double Taxation Agreement (DTA) and the Convention on Mutual Administrative Assistance in Tax Matters (Articles 8,9).

Guidance Notes

Administrative guidelines are available in the form of the guidance note on mutual administrative assistance through exchange of information in tax matters and the guidance note on coordinated external tax audits with tax administrations of other states and territories.

Dispute avoidance instead of dispute settlement

Primary objective of Joint Audits is to avoid double taxation and double non-taxation through increased information transparency between tax administrations. It has been noted that double taxation often occurs when a transaction with a cross border element is taxed based on a unilateral determination of facts and application of national tax law only. In particular transfer pricing adjustments that are based on unilaterally determined facts often result in double taxation, unless the tax administration of the other country carries out a full corresponding adjustment to the initial adjustment.

To prevent an inconsistent determination of facts and ultimately a double taxation, in a Joint Audit the facts are determined jointly by the tax auditors of all participating countries. As a consequence, lengthy and often costly mutual agreement procedures can be avoided or at least can be concluded more quickly and in a more efficient way based on the mutually determined facts.

Competent Authority

Pursuant to Section 5 (1) no. 5 German Tax Administration Act (FVG) (see also Section 3 (2) EUAHiG), the central liaison office in Germany is the Federal Central Tax Office (FCTO), here since 1 January 2019 Division Bp III 8 (until 31 December 2019 Bp I 1). The separate division Bp III 8 has been established since May 2017.


In Germany, there is no legal right for taxpayers to apply for a Joint Audit. A taxpayer can, however, contact his competent tax office and ask the authorities to engage in the desired procedure.

Initiation in Germany

The initiation is carried out internally between the competent tax office and the tax administrations of the respective federal state.

The proposal for a Joint Audit is submitted to Division Bp III 8 of the FCTO through the official channels (tax administrations of the federal states). It consists of a set of documents, inter alia details regarding the taxpayers’ entities which are considered to be in scope of the Joint Audit both in Germany and abroad, the transactions with cross-border elements to be examined and the period for the tax audit (fiscal years). In addition a conclusive and comprehensible description of the case will be submitted together with a cover letter for the foreign tax administrations.

The documents will be sent to: joint.audit@bzst.bund.de

The proposal will be assigned to an audit coordinator of Division Bp III 8 (Coordinator). This Coordinator forwards the proposal to the relevant countries’ central liaison office with a request for examination and approval.

Initiation by other States

Conversely, a proposal from another country will be received by Division Bp III 8 and promptly assigned to a Coordinator. The Coordinator checks the proposal for completeness and arranges further coordination with the competent authorities in the federal states and the federal tax audit unit in the FCTO as the case may be.

Upon approval of the Joint Audit by the competent German and foreign authorities, the Coordinator of Division Bp III 8 continues to support the tax auditors in the further course of the audit procedure.

Legal requirements

Congruent audit periods

A Joint Audit can only be carried out for congruent audit periods. The periods to be audited must be open for adjustments in all participating countries. In this respect Germany has so far been very flexible; either by extending the period under audit or by commencing a new audit period matching the scope of the Joint Audit.

Appropriate cases

There is no threshold with regard to turnover or profit of the company to be audited, nor is there a particular minimum level of facts or transactions. A Joint Audit is always appropriate if all other means of mutual administrative assistance in tax matters, i.e. an exchange of information on request or spontaneous exchange of information are either exhausted, have no prospect of success or are not indicated due to the complexity of the facts. In general, all issues in connection with cross-border transactions of multinational groups can be made subject to a Joint Audit.

Rejection of a Joint Audit proposal

Mutual administrative assistance by exchange of information is based on the principle of reciprocity. Proposals from foreign tax administrations will only be rejected if a tax audit in Germany is no longer possible for procedural reasons (statute of limitation), the participating countries have not exhausted other applicable and appropriate instruments for the mutual exchange of information or a trade, business or professional secret or a business procedure would be at risk of disclosure.


Pursuant to Section 117 (4) third sentence AO in conjunction with Section 91 AO, German taxpayers are given notice of the intended Joint Audit subject to the discretion of the competent tax office in due time. Thus, they have the opportunity to make a statement and raise objections as the case may be. The duration of the hearing period is subject to the discretion of the competent tax office. It is usually four weeks, but a longer period can be considered if necessary.

If the taxpayer raises objections they are assessed by the tax administration of the federal states and the Coordinator. In the case of the German tax administration rejects the objections the taxpayer can file for an injunction with the Local Fiscal Court in Cologne. The German tax administration is prevented from exchanging information until clarification is served by the court.


Upon receipt of a proposal by Division Bp III 8, the case is assigned to a Coordinator who is responsible for the case. The Coordinators have a cross-case general and overarching delegation (mandate) to act as competent authority by virtue of their position in the competent division Bp III 8. This mandate entitles the Coordinators to both direct exchange of information with other central liaison offices as well as sub delegate a mandate for the direct exchange information to German tax auditors. The Coordinators assign the mandate for the direct exchange of information to the tax auditors only for the duration of the relevant Joint Audit.

Upon assignment of the mandate, the Coordinators contact the foreign tax administration as well as the tax administration of the federal states. If the German and foreign tax auditors involved consider a Joint Audit to be appropriate, the tax auditors of the countries involved schedule meetings during which the direct exchange of information between the auditors is carried out.

Time expenditure

On average, three meetings, each lasting 1 to 2 days, are arranged in the course of a Joint Audit. Bilateral Joint Audits are usually concluded within less than one year while multilateral Joint Audits may take longer.

Rights of the auditors involved

In a national tax field audit, tax auditors investigate only on their own territory, whereas during a joint audit foreign auditors actively or passively attend and participate in audit activities in Germany and German auditors actively or passively participate in audit activities abroad.

"Active" in this context means that the foreign tax auditors, provided the taxpayer has given its consent, are entitled to carry out certain investigations i.e. examining records and interviewing persons in the presence of domestic officials (active right of examination; Section 10 (3) EUAHiG). Information gained in a coordinated tax audit is exchanged on the spot if the information is ”foreseeably relevant” for the taxation in the respective country (Sections 1, 4, 6, 8, 12 EUAHiG, Article 26 DTA).

Limitations or obligations under the national tax law of the respective foreign country must be observed by the foreign auditor in addition to limitations stipulated under German tax law when the foreign tax auditor is present in Germany. In turn, a German tax auditor who participates in a Joint Audit abroad has only the powers given to him under German tax law and the respective national law of the foreign country. If there are extended audit rights under the law of the foreign country compared to German law, the German tax auditor is bound to the more narrow German tax law, i.e. is not entitled to use the extended investigation rights (cf. subparagraph 2.2.4 of the guidance note on coordinated external audits).

Job of the Coordinators

The Coordinators are responsible for all organisational and administrative matters around Joint Audits. They handle the initiation as well as examination and forwarding of foreign Joint Audit applications, establish the contact with foreign tax administrations and are in charge of further correspondence with the participating countries via specially secured communication networks. Their assignment also includes providing data input in the relevant IT data bases established by the EU, preparing meetings, minutes and audit reports if required, ensuring funding for travel expenses (in the EU via Fiscalis) and assisting the tax auditors of the federal states tax administrations or the federal tax audit unit with both language and professional know-how as and if required.

Coordinators also function as "information and service hub". Their position within the FCTO with its various divisions that are responsible for all forms of exchange of information, mutual agreement procedures and APAs as well as the close contact with the German Federal Ministry of Finance (BMF) enables a constant transfer of information. This ensures the uniformity of Germany’s legal position in all types of tax administrative procedures with other countries. In turn, information derived from Joint Audits in Germany is bundled in one place guaranteeing a flow of information from the tax audits to the relevant divisions in the FCTO and the BMF. This function is also for the benefit of the respective tax administrations of the federal states.

Working language

The working language is English if German is not the native language of all involved tax administrations.

Summary minutes

At the end of the Joint Audit, summary minutes are drawn up by the domestic and foreign tax auditors participating in the Joint Audit (typically in English if English has been determined as working language). The summary minutes shall contain the mutually determined facts and a legal assessment based on the respective national tax laws while taking the applicable DTA into account. These minutes serve as basis for the tax audit reports that are used to implement the established facts into the respective national law of the countries involved.

No agreement reached

If the tax auditors involved in the Joint Audit cannot agree on a corresponding assessment of the facts and their appreciation with respect to the applicable DTA and if this results in a potential double taxation the taxpayer may request a mutual agreement procedure, provided that the legal requirements are met. However, since the facts have already been determined jointly during the preceding Joint Audit the time required for a mutual agreement procedure can be reduced.

Travel expenses

Travel expenses for Joint Audits with EU Member States can usually be financed from the budgetary funds of the EU (FISCALIS 2020 programme).

Competence centres of the federal states

Joint Audits are an already well established instrument in the international cooperation of tax administrations. The tax administrations of the federal states with their responsibility for tax audits play a key role in the federal system of the Federal Republic of Germany. Some federal states have established so-called competence centres for Joint Audits. Objective of these centres is to bundle expertise, to ensure a uniform coordination and to enhance the sharing of experience with foreign tax administrations regarding Joint Audits. In addition, these centres support the tax auditors with regard to linguistic and organisational matters. They also monitor the legal and practical development of this instrument.

Advantages of Joint Audits

A mutual and comprehensive determination of the relevant facts is available due to the direct exchange of information between the tax auditors of the tax administrations involved. For example, joint questionnaires can be directed to the taxpayer and the competent individuals responsible for tax affaires at the level of the taxpayer can be interviewed jointly. Compared to a purely national tax audit with a subsequent mutual agreement procedure, the joint investigation of the facts of the case and the subsequent tax assessment has proven to be both time-saving and effective.

It is a powerful instrument for both the tax administration and the companies to obtain legal certainty and planning security at an early stage. Since all tax administrations involved are engaged in the process at an early stage and the taxpayer, unlike in a mutual agreement procedure, has direct opportunities to participate, the trust between the tax administrations and the taxpayers is strengthened. The audit results are comprehensible and extreme fiscal positions are avoided.

The success of the Joint Audit procedure to a large extent depends on the cooperation of the taxpayer and the tax authorities involved. The taxpayer has the advantage that he must prepare the desired documents and information only once. In addition, it is not the taxpayer himself who has to try to find bilateral solutions with different tax administrations, which may contradict each other, but the tax administrations have to find a common and viable solution among themselves. The taxpayer will no longer be directly exposed to the conflicting interests of the various tax administrations and thus finds himself in a much more comfortable position.

If an agreement within the Joint Audit framework is reached, a mutual agreement procedure is no longer necessary. In the event of failure, the existence of jointly determined facts and circumstances speeds up subsequent mutual agreement procedures or APAs significantly.


Avoiding disputes will be the key issue for tax administrations in the future. Cross-border activities of internationally operating groups have continued to increase significantly in recent years. Tax administrations must react to these developments, which are likely to continue in future, by enhancing international cooperation. In addition, the current discussion about how to tackle the challenges of the taxation of the digitisation of the economy shows that tax obligations may also arise without a physical presence. The complexity of the discussed solutions bears the risk of increasing double taxation while against that background the advantages of Joint Audits become apparent.

For the future, it can therefore be assumed that the number of Joint Audits will continue to increase as even smaller companies begin to act globally. This includes an expansion in the exchange of information in tax matters with non-EU countries. Joint Audits will play a key role in reducing costs, speeding up procedures and ensuring legal certainty early on.


Bundeszentralamt für Steuern

Division Bp III 8
An der Küppe 1
53225 Bonn

Phone: +49 228 406-2314
Fax: +49 228 406-2643


Joint Audit

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