Decline in Tax Audits Observed Across Corporate Sectors
In recent years, the number of business audits in Germany has seen a significant decrease, with around 140,000 audits conducted in 2024 - a drop of nearly 60% over the past decade. This decline can be attributed to a combination of regulatory, economic, and structural factors impacting audit demand.
One key reason for this trend is the regulatory changes and simplification of audit requirements. Smaller companies and medium-sized enterprises in Germany have faced reduced mandatory audit thresholds or exemptions, leading to fewer audits being performed.
The increase in digitization of financial records and the use of integrated compliance technologies has also altered audit practices. Some routine audit processes have been streamlined or replaced by automated controls, leading to an overall decline in traditional audit engagements.
The past decade has also seen growth in start-ups, freelance business structures, and smaller enterprises, which often do not meet audit thresholds or opt out of audits for cost reasons. Additionally, economic shifts including the COVID-19 pandemic’s impact and corporate restructuring have influenced audit demand patterns.
Companies and regulators are focusing more on other risk management and compliance activities, potentially reducing reliance on standard audit services. This shift, combined with the complexity and increased workload of audit cases, may be contributing to the decline in audits.
Anne Brorhilker, the managing director of the Initiative Finanzwende, has criticized this trend, stating that strengthening the tax authorities is necessary for the rule of law and democracy. She suggests that the federal government should help states hire enough staff if they are unable to do so. Her criticism was published in the "Süddeutsche Zeitung."
The tax authorities employed 12,359 business auditors in 2024, which is almost 10% less than in 2015. Despite this decrease, the Federal Ministry of Finance reported in October 2024 that 1.7% of businesses, or 146,516, were audited in the previous year.
Many auditors are assisting with other projects, such as the reform of real estate tax. While the search results do not provide direct data specific to Germany’s audit trends, these factors are consistent with known global and European audit market trends and explanations seen in the audit services industry, including contextual insights into business and regulatory developments affecting audit activity.
- The decline in business audits in Germany over the past decade, as observed in 2024 with around 140,000 audits, can be partially attributed to reduced mandatory audit thresholds and exemptions for smaller companies and medium-sized enterprises, facilitating less traditional audit engagements.
- The increasing use of digitization and integrated compliance technologies in finance, such as automated controls, has led to streamlining of routine audit processes and a reduction in traditional audit demands, further contributing to the decrease in business audits in Germany.
