Will German tax authorities be allowed to check emails and chats in future?

BFH specifies requirements for data access in electronic communication (in this case, emails)

BFH decision of 30 April 2025, case. [IE1] XI R 15/23 (preliminary decision by the Hamburg Finance Court of 23 March 2023, case. 2 K 172/19)

While it is undisputed that traditional accounting documents such as invoices and bank statements must be retained, the treatment of electronic communications – especially emails – has been a source of considerable uncertainty for years.

The Federal Finance Court ('BFH ') has now provided some clarity on this issue with its decision of 30 April 2025 (XI R 15/23). The decision clarifies which emails must be retained and to what extent the tax authorities may access them in the course of an external audit. The decisionThis has an impact on internal compliance and is also of considerable importance for tax audits.

1. What did the BFH have to decide?

As part of an external audit covering the years 2012 to 2014, the tax office demanded that a private limited liability company (GmbH), which was part of a consolidated group, submit all emails relevant to tax relating to an intra-group service provision contract. The tax office also demanded that the GmbH compile a comprehensive log, which was to be machine-readable and include details such as the sender, recipient, subject, date, time and attachments of all messages. This would provide a comprehensive overview of the company's electronic communications and enable the submitted emails to be verified as the full set. 

The GmbH objected to this extensive request. It argued that the request for emails was unlawful due to its vagueness and lack of legal basis. In any case, the exercise of discretion was flawed. Similarly, there was no legal basis for either the preparation or submission of the comprehensive log.

The Hamburg Finance Court ruled that although the submission of all emails relating to a tax-relevant transaction (including documentation on group transfer prices) could be requested, a general complete log was not required. Both the GmbH and the tax office appealed against this differentiated ruling to BFH.

2. What was the Federal Fiscal Court's legal assessment?

The Federal Fiscal Court dismissed both appeals as unfounded in accordance with Section 126a of the German Fiscal Court Rules (Finanzgerichtsordnung, “FGO”).

The BFH first confirmed that emails can also be considered commercial or business letters within the meaning of Section 147 para. 1 no. 2 and no. 3 of the German Fiscal Code (Abgabenordnung, “AO”) and are therefore subject to retention requirements if they relate to the preparation, conclusion or execution of a commercial transaction. In addition, emails relating to transfer pricing documentation may be subject to retention requirements under Section 147 paras. 1, 5 AO. 

The Federal Fiscal Court concluded that, on the basis of the retention obligation, such emails must be kept and presented in the context of an external audit, or access to the data must be granted in accordance with Section 147 para. 6 AO. A request for submission by the tax office is legally permissible provided it is limited to emails with tax relevance.

However, according to the BFH, there is no legal basis for the obligation to create a comprehensive log of all emails, including those that are not relevant to tax purposes. Such an extensive request by the tax authorities exceeds the legal limits and is unlawful.

At the same time, the BFH reaffirmed the taxpayer's 'initial qualification right', meaning that it is the company's responsibility to initially decide which emails are tax-relevant and should be submitted.

3. Recommendations for action for companies

While the decision provides clarity, it also tightens the requirements for companies' internal organisation. In practice, this means:

• Companies must be able to distinguish between tax-relevant emails and irrelevant communications.

• The selection process ('initial qualification') should be documented in a comprehensible manner in order to prevent discussions with the tax authorities.

• Audit-proof storage of relevant emails is required, also with regard to their retrievability during a tax audit.

• Requests for general disclosure that also include irrelevant emails are not permitted. Companies should carefully review such requests and, if necessary, challenge them legally.

• The principles apply not only to traditional emails but can also be applied to other forms of electronic communication, such as internal chats (e.g. Microsoft Teams, WhatsApp), where tax-relevant content is concerned.

• In our estimation, it is important to note that classifying emails as documents under Section 147 para. 1 no. 5 AO does not automatically imply the full application of proper accounting principles (Grundsätze ordnungsgemäßer Buchführung, “GoBD”). In particular, we do not consider the immutability requirement under Section 146 para. 4 AO or the obligation to document procedures under Section 145 para. 1 AO to be readily applicable here. In practice, this creates an opportunity for debate if the tax authorities object to alleged GoBD violations during tax audits.

4. Conclusion

In many cases, the BFH is now providing a legal basis for requests to disclose emails in the context of tax audits. In our opinion, companies should prepare for an increase in such requests in future.

We are available to advise you on specific legal questions relating to the design of selection and archiving systems, which are now necessary. Our goal is to help you record tax-relevant communication in a practical and legally compliant manner, while ensuring it remains retrievable for audit purposes.

At the same time, the ruling shows that not every disclosure request is legally permissible. In particular, blanket or excessive demands can be rejected based on BFH case law. We can also assist you with the legal classification of requests for disclosure and defend you against those that are unjustified in the context of tax audits.

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The above information is for informational purposes only and does not replace legal or tax advice.