The requirements of the tax authorities for cash-intensive businesses have been tightened for some time. Most recently, we reported that the cash registers must be upgraded with a so-called technical security device. The deadline of 30 September 2020 was extended to 31 March 2021 due to problems with the implementation at the cash register manufacturers.
In addition, we had also reported that companies affected by cash transactions must have procedural documentation (VD) ready. Here, the individual federal states vary in the extent to which this VD is required for tax audits.
In the eyes of the tax authorities, cash transactions are susceptible to tax evasion. Therefore, there is then a danger of honest taxpayers being mixed up with the dishonest ones, as high uncertainty surcharges are made for even the smallest discrepancies. So what if cash were to cease to exist in the future? Is that even a conceivable scenario? Would that even be desirable from a business perspective? We have done some research here.
It is certainly conceivable. At least that’s what the Swedes are trying to show us. They are planning to introduce the digital e-crown. In our country, too, people now often take out their debit cards, even at the bakery. Is a rethink taking place here? Which interest groups are there and what is their opinion? Here is a brief overview:
In favour of abolition are:
– The state, because it can fight crime (combating arms and drug trafficking, illegal prostitution …) and tax evasion much more easily this way.
– the banks because of the costs associated with production, distribution and storage (but ultimately the consumer pays for these)
– some entrepreneurs, because then the employees could not reach into the till
The argument against abolition is:
– on the issue of crime control: crimes are shifting to the more lucrative cybercrime. Traditional bank robbery is dying out.
– on savings behaviour: When banks go bust, all savings deposits would possibly be gone. The money under the pillow or in the drawer at home would still be there in this case, provided the burglar does not have it. The trust of savers in banks and digital payment transactions is not present in many people’s minds.
– On the subject of tax evasion: the stricter requirements and due diligence obligations mean that tax-honest citizens, if they observe them, can set themselves apart and avoid assessments.
– And on data protection? Every purchase we make would automatically be stored in at least one database. Is that what we want? Aren’t we losing another piece of freedom here?
In our opinion, cash will continue to exist in Germany for the next few years. However, Corona has shown that it is up to each entrepreneur to decide whether they want to offer their goods only without cash or not.
The fact is that digital payment transactions are increasing strongly. Cash-intensive businesses that handle the issue conscientiously will also have few problems with tax audits.