In its decision of 30 April 2025 (Case No. XI R 15/23), the German Federal Fiscal Court (Bundesfinanzhof, BFH) has addressed the long-disputed and practically relevant obligation to disclose emails during external tax audits. The Bundesfinanzhof (BFH) confirms that, during external audits, tax-relevant emails must be disclosed upon request by the tax authorities, but not a so-called “complete email journal.” The taxpayer is granted an initial qualification right in this context.
Background
Increasing digitalization, new decentralized work models such as home office and matrix organizations, and the resulting shift of business communication to emails and online meetings have significantly increased the importance of electronic communication in everyday business. Nevertheless, the obligation to disclose such information during external audits is not fundamentally new. This requirement was already addressed in the administrative guidelines of 3 December 2020, under the definition of data access as well as stipulated in Section 147 (6) of the German Fiscal Code (Abgabenordnung, AO), as part of the taxpayer’s duty to cooperate according to Section 90 AO.
In practice, it is increasingly observed that the submission of tax-relevant emails is being requested more frequently as part of fact-finding during audits. These are no longer only requested as evidence of actual conduct in the absence of written contracts, but also, for example, in the context of reviewing the actual functional and risk profile of the taxpayer, such as in connection with the allocation of DEMPE functions for intangible assets. The functional and risk profile is a fundamental basis for transfer pricing analysis.
BFH decision of 30 April 2025 (Case No. XI R 15/23)
Based on the decision of the Hamburg Fiscal Court of 23 March 2023 (Case No. 2 K 172/19), the Bundesfinanzhof (BFH), in its decision of 30 April 2025 (Case No. XI R 15/23), addressed fundamental questions regarding the obligation to disclose emails during tax audits:
Emails as commercial and business letters under Section 147 AO
The Bundesfinanzhof (BFH) confirms that emails containing tax-relevant information can, in principle, be considered commercial or business letters within the meaning of Section 147 (1) Nos. 2 and 3 of the German Fiscal Code (Abgabenordnung, AO).
Digital documents related to transfer pricing within groups
Digital documents related to group transfer pricing must be stored separately according to Section 147 (1) No. 5 of the German Fiscal Code (Abgabenordnung, AO). Emails and other documents that are particularly relevant for taxation in the context of transfer pricing must be retained and presented upon request, regardless of their format.
Tax relevance as a criterion for disclosure
During an external audit, the tax authorities are entitled to request all emails related to a tax-relevant matter (for example, a business relationship). In principle, the term “tax relevance” includes all emails that could influence the tax assessment of such matter. The tax office is not obliged to further narrow down the selection, for example by specifying certain search terms, employees, or periods. Rather, as is the case with electronic data access in general, it is up to the taxpayer to independently identify and present the tax-relevant emails. This approach is referred to as the taxpayer’s initial qualification right.
No demand for a complete email journal
The tax authorities do not have the right to request a complete journal of all emails – i.e., a record of all incoming and outgoing emails regardless of their tax relevance (see Uterhak/Peters/Braun, 2020).
Initial qualification right as a double-edged sword
Within the framework of the initial qualification right, it is the taxpayer’s responsibility to identify emails with tax relevance for disclosure during the audit. Thus, a complete journal containing all emails does not have to be created by the taxpayer.
In practice, however, identifying tax-relevant emails (which also applies to all other electronic correspondence such as messenger services, etcetera) presents significant challenges. The taxpayer is responsible for distinguishing between tax-relevant and non-relevant emails and storing them separately. Ensuring a clear and complete distinction is extremely difficult. In today’s working environment, characterized by complex matrix organizations, home office, and extensive digital information exchange, the volume of data to be qualified is enormous and highly complex. Especially in transfer pricing matters, where the functional and risk profile of the taxpayer is examined, questions may arise as to the limits of tax relevance.
The potential for errors in the identification process is also considerable, increasing the likelihood that taxpayers may not fulfill their duty to cooperate during the audit, or may not do so in a timely manner. Without early and careful definition of processes and responsibilities to identify tax-relevant emails, as well as their documentation, this will regularly not be possible. The KPMG experts in Tax Transformation are available to support you with the procedural aspects of the initial qualification.
Practical recommendations
During external audits, taxpayers are confronted with a multitude of additional tasks in order to meet the tax authorities’ requests as part of their cooperation obligations. Providing tax-relevant emails is particularly time- and resource-intensive due to the extensive preparatory work required. Furthermore, the risk is high that, if the initial qualification is flawed, all correspondence must be submitted.
Therefore, it seems advisable to establish a continuous initial qualification process, whereby emails are continuously classified as tax-relevant or not tax-relevant. The increasingly effective AI-based analysis tools developed in recent years can be of great value here, as they are already capable of taking over a large part of the identification process and thus significantly relieving the taxpayer. Ultimately, in our view, a fully automated initial qualification is not yet possible, which is why it remains essential to allocate resources for reviewing tax-relevant emails and to provide appropriate training.
Publication Date:
28 November 2025
References
- Braun/Peters (2020): Zur Fortentwicklung des Datenzugriffs gemäß § 147 Abs. 6 AO, beck.digitax, 2020, 139.
- Hamburg Fiscal Court, decision of 3/23/2023, Case No. 2 K 172/19.
- German Federal Fiscal Court (BFH), decision of 4/30/2025, Case No. XI R 15/23.
- Uterhak/Peters/Braun (2020): Uneingeschränkter Datenzugriff der Finanzverwaltung auf E-Mail-Konten?, beck.digitax, 2020, 13.