GoBD: when time records become relevant for tax

What the GoBD are

GoBD stands for the principles for the proper keeping and retention of books, records and documents in electronic form and for data access. They are not a statute but a circular of the Federal Ministry of Finance, last comprehensively issued on 28/11/2019 and supplemented since.

Legally, the GoBD bind the tax administration, not the courts. In practice they determine what is expected in a tax audit.

When time tracking falls under them

Not every time record is relevant for tax. What matters is whether it becomes a basis for the accounts. That is the case where invoices to customers come out of it, for instance when billing by effort, or where it forms the basis of payroll.

Where the record serves solely occupational safety and compliance with the Working Hours Act, the GoBD do not apply. In practice the two can rarely be separated cleanly, because overtime accounts and premiums feed into payroll.

The six principles

Traceability and verifiability: an expert third party has to be able to check how a figure arose within a reasonable time. Completeness: no transaction may be missing. Correctness: the representation has to match the actual circumstances.

Timely posting and recording: the connection between the transaction and the posting has to be preserved; non-cash transactions should be recorded within ten days. Order: the records have to be systematically ordered.

Immutability: a change has to be logged in such a way that the original content remains identifiable. It is precisely this point that makes an open Excel file a problem.

• Traceable and verifiable for an expert third party.
• Complete, correct, timely, orderly.
• Immutable: corrections logged, the old value identifiable.
• Process documentation describes the process, the system and the controls.

Retention

Under section 147(3) of the Fiscal Code, commercial books and opening balance sheets have to be kept for ten years, accounting vouchers for eight years and other documents for six years. The period for accounting vouchers was shortened from ten to eight years.

Documents created electronically have to be kept electronically. A printout is not enough: under section 147(6) AO the tax administration has a right of data access, and for that it needs the machine-readable data.

When changing system, access to the old data has to be preserved, if necessary by exporting it in an analysable format together with the process documentation.

The process documentation

It describes how data arises and is processed, secured and retained: a general description, a user documentation, a technical system documentation and an operating documentation.

For time tracking that means in concrete terms: who records how, who may correct, how it is logged, how the data gets into payroll, how long it is kept, who has access. Missing documentation is not in itself a serious defect, but it makes the audit harder and weakens your position in case of doubt.