Control notification

The control notification is an instrument for external tax audits. If, during the examination of a taxpayer, facts are found that are also relevant for the taxation of a third party, this can be communicated to the tax office, which is responsible for the third party.
The legal basis for the control notification is Section 194 III AO. It is used by the tax offices to check whether tax-relevant transactions have been recorded accordingly for all parties involved. They are used in particular for unusual business transactions (cash payments, settlements, exchanges). In international tax law, control notifications can be used in accordance with the law of tax agreements (cf. Art. 26 OECD model agreement), in accordance with Section 117 AO or the EC Administrative Assistance Act to clarify international business activities.

Two legally independent companies under the same management (group) are generally taxed individually and independently of each other. Due to the separation principle, distributed profits are recorded for tax purposes at each group company. This can result in a double burden nationally, with the box privilege, the half-income method, the Tax group, group taxation or any other form of taking into account taxes already paid can be avoided.

Economic issues arise from cross-border issues; Double taxation with the help of tax treaties, the Interest and License Directive or due to the Mother-Daughter Policy (Section 43b EStG; Section 8b KStG). On the basis of the individual profit determination, each group company has to determine and pay tax on the tax result. Under the fiction of economic independence, economic connections between group companies are negated; In terms of taxation, loss compensation within the group would be eliminated.

For the national area, certain corporate relationships have been taken into account with the provisions on tax groups in corporation tax law (§§ 14-19 KStG), trade tax law (§ 2 II GewStG) and sales tax law (§ 2 II No. 2 UStG). The corporate tax group is of particular importance.

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