Who has to keep books, and from when that duty really applies

An online retailer crosses 800,000 € of turnover in March and sets up double-entry bookkeeping in April, with an opening balance sheet and an accountant's fee. None of it was required. The statute ties the start of the duty not to turnover but to a notification from the tax office — and to the financial year that follows it.

Two routes into the bookkeeping duty

The duty to keep books arises by two routes, and they are regularly conflated. One is derivative: section 140 of the Fiscal Code adopts whatever other statutes already require. The other is originally a tax duty and sits in section 141.

The derivative route concerns commercial law above all. Anyone who is a merchant under the Commercial Code and has to keep books keeps them for tax purposes too. A GmbH or a UG always falls within it, whatever its size — the legal form alone decides.

The tax route bites where commercial law yields nothing. Section 141 says so expressly: the obligation exists even where no bookkeeping duty follows from section 140. It closes a gap, it does not duplicate anything.

Section 141 is addressed to commercial traders and to farmers and foresters. That list is exhaustive, and therein lies this module's most important news for a large share of the self-employed.

Members of the liberal professions do not appear in it. A doctor, an architect or a translator never becomes subject to bookkeeping under section 141, however high turnover and profit may be. They may stay with the cash-basis income statement indefinitely.

That is not an oversight but the flip side of another rule: members of the liberal professions are not merchants, and where commercial law requires no books, tax law does not force them here either. The advantage is considerable and often goes unused.

The two amounts, and the word or

For commercial traders section 141 names two quantities. The first is total turnover within the meaning of the VAT Act exceeding 800,000 euros in a calendar year. The second is a profit from trade exceeding 80,000 euros in a financial year.

Between them stands an or, not an and. Exceeding one of the two therefore suffices. A trading business with a million in turnover and 40,000 euros of profit is caught just as much as an agency with 300,000 euros of turnover and 95,000 euros of profit.

The cross-reference to total turnover under section 19(2) sentence 1 of the VAT Act is no accident. It is the same quantity that decides the small business VAT rule. Compute it cleanly once and you have computed it for both provisions.

For farmers and foresters the statute states the profit threshold separately and relates it to the calendar year instead of the financial year. That sounds like a nicety but becomes practical as soon as a business has a financial year differing from the calendar year.

What keeping books actually demands

Anyone caught by section 141 does not keep a special tax ledger. The provision refers out to commercial law: sections 238, 240, 241, 242(1) and sections 243 to 256 of the Commercial Code apply by analogy, unless the tax statutes provide otherwise.

The whole scaffolding of commercial bookkeeping comes along with that. Double-entry bookkeeping, an annual stocktake, an opening balance sheet, a balance sheet at the close of each financial year, and the principles of proper bookkeeping presiding over all of it.

The rider unless the tax statutes provide otherwise is no afterthought. Where income tax law has valuation rules of its own, they prevail — that is the origin of the divergences between the commercial and the tax balance sheet.

The annual stocktake is the part felt most keenly in practice. It requires a physical count of inventory at the reporting date, with all the organisation that entails, and it cannot be produced retrospectively at a desk.

That is exactly why the timing covered in the next section matters. Someone told that he must keep books from the coming financial year needs the time until then — for the opening balance sheet, for the software, and for the first stocktake.

The sole trader and his exemption

On the commercial law side there is a countermovement, and it works with the same figures. Section 241a of the Commercial Code releases sole traders from the bookkeeping provisions of sections 238 to 241 where they do not exceed certain values.

Those values are 800,000 euros of revenue and 80,000 euros of annual surplus. Here, though, there is no or but an and: both must be observed, and observed at the reporting dates of two consecutive financial years.

The same amounts that singly trigger the duty in tax law must jointly be observed in commercial law to avoid it. The provisions are coordinated, but their logic is mirrored, and reading them easily produces the wrong picture.

For new businesses the statute shortens the wait. The legal consequences arise as soon as the values are not exceeded at the first reporting date after formation. A young sole trader therefore need not keep books for two years in order to be released afterwards.

Note that section 241a covers sole traders only. A commercial partnership or a company cannot rely on it, however much smaller it may be. Here the legal form is the filter, not the size.

The start: not the turnover but the notification

Now the provision that would have saved the retailer from the opening his fee. Subsection 2 of section 141 governs not whether the duty exists but from when it has to be performed — and that is something else entirely.

The obligation is to be performed from the start of the financial year following the notice of the notification by which the tax authority pointed out the beginning of that obligation. Three conditions, then: a notification, its notice, and the financial year that follows.

Without a notification nothing starts. Anyone who exceeds the amounts and never hears anything continues to determine profit by a cash-basis income statement, and does so lawfully. The tax authority makes the finding, not the taxpayer about himself.

And even after the notification there is time. It does not take effect at once and not retrospectively but on the next financial year. A notice in October therefore usually leaves until 1 January to prepare the change rather than forcing it mid-year.

The reverse direction is built the same way. The obligation ends with the close of the financial year following the year in which the tax authority finds that the conditions no longer apply. The exit, too, is found by the authority rather than declared by the taxpayer.

In practice that means anyone falling back below the amounts keeps books for a while yet. Changing the method of determining profit is laborious anyway, and the legislator thereby prevents a yearly back and forth.

The timing therefore separates two questions that advisers constantly run together. Whether someone is subject to bookkeeping is answered by subsection 1. From when he has to be is answered by subsection 2 alone — and the answer is never earlier than the next financial year.

There is an uncomfortable side to this as well. Anyone waiting for the notification while exceeding the amounts for years can receive it at any time. The change can be prepared for, but it cannot be avoided indefinitely.

How long records must be kept

Section 147 tiers retention into three periods. Books, records, inventories, annual accounts and management reports must be kept for ten years. Accounting vouchers for eight years. The other records, such as commercial letters received, for six years.

The start is set out in subsection 4 and is often placed wrongly. The period begins at the close of the calendar year in which the last entry was made, the accounts were drawn up, or the accounting voucher arose — not with the date on the document itself.

A voucher from February 2026 therefore does not run from February but from 31 December 2026. Eight years later means the end of 2034. Counting from the document date routinely destroys records ten months too early.

Above all three periods sits a clause that can effectively extend them. The retention period does not expire so far as and so long as the records matter for taxes whose assessment period has not yet run out.

A running audit or an open objection therefore suspends the period. The figure in the table is a floor, not a promise. Disposing of records after eight years while an audit is under way destroys precisely the documents then needed.

Delivery notes enjoy a rule of their own, and a pleasant one. Where they are not accounting vouchers, the period ends on receipt of the invoice for notes received and on despatch of the invoice for notes sent. They need not be carried along for years.

The qualification in that rule is what carries it, however. It applies only so far as the delivery note is not an accounting voucher. Where it is posted from, because it replaces or supplements the invoice, it falls back into the eight-year period and stays in the archive.

• digital records must be available at any time throughout the period and readable without delay
• they must be capable of machine evaluation, for which a screenshot does not suffice
• anyone producing them only on a data carrier supplies the means of reading them at his own cost
• shorter periods under non-tax statutes leave the tax period untouched

The last item ends a widespread hope. A shorter period from another area of law does not shorten the tax one. For retention the longest applicable period always governs, and it almost always comes from the Fiscal Code.

Where the records were produced with the help of a data processing system, a further power arises. In the course of an audit the tax authority may inspect the stored data and use the system itself to examine those records.

Retention therefore means more than archiving. The system holding the data must stay capable of evaluation for the whole period. A change of software without an export strategy creates a problem exactly where nobody can fix it years later.

That applies to businesses without a bookkeeping duty too. Anyone running a cash-basis income statement in a program produces his records with a data processing system and falls under the same provision as a business that keeps full accounts.

One practical conclusion: exported, machine-readable files belong in the archive, not only the printouts. A PDF satisfies legibility but not, without more, the capacity for machine evaluation that subsection 2 expressly requires.