The estimation of income and expenditure is everyday business for the tax authorities. However, these estimates are not always legal.
Some taxpayers are too quick to submit to the assumptions of the tax office in order to avoid a dispute.
It is often overlooked that estimates are only permissible under certain circumstances and must follow certain rules.
For an estimate to be made, there must be a reason for the estimate. This is the case, for example, if the taxpayer fails to cooperate or if the bookkeeping is inadequate. Many taxpayers overlook the fact that by submitting a tax return they have already fulfilled a large part of their duty to cooperate. And also the bookkeeping is only to be discarded within certain narrow limits.
Finally, the tax office must disclose the estimation method. The case law only allows certain methods. If these are not adhered to, the estimate can be challenged.
If you would like to learn more about estimating taxes, please contact us.