A recent survey conducted by the “Süddeutsche Zeitung” across Germany’s 16 federal states reveals a significant decline in the number of tax auditors and, consequently, a reduction in collected tax revenue from audits. The findings indicate that micro-enterprises are currently being audited, on average, only once every 150 years.
The number of corporate tax audits has plummeted by nearly 60% over the past decade, dropping to just 140,000 in the latest reporting period. As of last year, federal tax authorities employed 12,359 corporate auditors, a decrease of almost 10% since 2015.
This trend is further reflected in the decreasing amounts of back taxes collected through these audits. While average collections were around €16 billion in the early 2000s and 2010s, last year’s total fell to just under €11 billion. This occurs at a time when the government is actively seeking additional funding, with Federal Finance Minister Lars Klingbeil currently facing a shortfall of over €170 billion in his financial planning for the years 2027-2029.
The development appears paradoxical given the widely held belief that each corporate auditor generates approximately €1 million in additional revenue for the public sector annually – considerably more than the cost of their employment to the respective federal state. Critics have long argued for an increase, not a decrease, in the number of auditors.
According to the Federal Finance Ministry, only 16 out of every 1,000 businesses were subjected to an audit last year – meaning less than one in sixty. However, audit frequency varies significantly by company size. Large and medium-sized enterprises experienced audit rates of nearly 296 and 183 per 1,000 respectively, while corporations are subject to ongoing oversight due to the multi-year review of their financial data. In contrast, small businesses face audits on average once every 38 years, while micro-enterprises, which constitute over 80% of all companies in Germany, are audited only every 150 years.
Federal states cite a shortage of skilled workers as one contributing factor to the decline. Simultaneously, they report that audit cases are becoming increasingly complex and time-consuming. Additionally, many auditors have been temporarily assigned to other projects, such as the recent property tax reform.
Anne Brorhilker, a former prosecutor and current CEO of the financial transparency initiative Finanzwende, voiced strong criticism. “Anyone who wants to strengthen our rule of law and therefore our democracy, must significantly strengthen the financial authorities personnel-wise and structurally. Anything else is negligent” she stated. Brorhilker suggests that if the federal states are unable to recruit sufficient staff, the federal government should intervene by providing federal auditors.