The provision usually includes the cost of premises, IT costs, consulting costs and the company’s own support costs. The easiest way is to divide the total expenses for a tax audit by the number of years audited. An example.
Allocation of audit costs per fiscal year
An audit extends over several years, with the exception of the audit near the end of the year. It is hardly possible to allocate the expenses incurred to the individual audited fiscal years.
Tip: It is best to divide the total expenses for a tax audit by the number of years audited. If you are audited every five years, divide the total by five, d.h. per year 20 % are accrued.
Practice Note: The necessary data for the calculation come from accounting, where the well-functioning cost accounting is very helpful in obtaining information.
1) Example of calculation of room costs
The auditor needs eight weeks for the on-site audit. During this period, it is located in a room (40 square meters) of the administration building (950 square meters):
- Annual rent of the administration building: 120.000 euros
- Annual incidental costs: 95.000 Euro
- Proportionate rent of the room: 5.053 euros resp. 777 Euro (8 weeks)
- Proportionate incidental costs: 4.000 Euro or. 615 Euro (8 weeks)
Both rent and utilities are direct costs, indirect costs such as depreciation on buildings do not exist. Therefore, the same amount must be recognized in the commercial balance sheet and in the tax balance sheet.
Room costs in euros
Attention: If the auditor’s room is only used sporadically outside of the audit, the costs of the audit should be set higher. It is not enough to calculate only the pro rata costs for the audit period, because the room is reserved for the tax audit.
2) Example of calculation of IT costs
The tax auditor is given his own access to the system, which allows him to access all relevant data. In addition, the company auditor must be supported by the IT department. A user account and lists have to be created and an introduction to the programs has to be given. In addition, there are basic IT costs (server, network, security) that are necessary for general IT supply (here for 85 users). This means:
- Annual cost IT access: 1.800 Euro resp. 277 euros (8 weeks)
- Costs for external IT service provider: 2.000 euros
- IT basic costs per year: 175.000 euros, d.h. 317 Euro (8 weeks)
Only the costs of access and external support are to be allocated directly. The IT basic costs are not dependent in the amount on the execution of the tax audit. They are therefore excluded from the calculation for the tax balance sheet.
IT costs in euros
Attention: If the IT user for the auditor is also available outside of the audit period, but cannot be used, the costs for this also belong completely in the audit costs. The other way around: If all arrangements for the audit remain in place, even if no audit is currently taking place, the permanent costs cannot be deferred.
3) Example of calculation of consulting costs
During the audit, the tax advisor must also answer the auditor’s questions, explain certain positions and argue in favor of the decisions made together. For this he has 3.800 Euro charged. This sum is to be included both for the commercial law and for the tax law consideration.
Consulting costs in euros
4) Example for the calculation of care costs
A tax audit is a considerable burden for the accounting department. Answering the auditor’s questions, obtaining documents and discussing disputed issues required 320 hours of accounting work time in the past audit. In addition, there were eight hours in which a manager was involved in the audit: