Unannounced home inspection by the tax office may be unlawful
An unannounced home inspection by a tax investigation officer can be unlawful if the taxpayer helps to clarify the specific facts of the case. This was decided by the competent judges in a dispute regarding the tax deduction of a home office (September 29, 2022 - number 040/22 - judgment of 12.07.2022
VIII R 8/19).
The Federal Fiscal Court has issued a landmark ruling on unannounced home inspections by tax investigation officers as so-called flank protection inspectors. On July 12, 2022, the competent judges ruled that an unannounced home inspection by tax investigators acting as flank protection inspectors to verify information provided by a taxpayer is unlawful if the taxpayer helps to clarify the facts of the case.
Management consultant claims a study - flank protection auditor appears unannounced
In this particular case, a woman working as a managing director and self-employed management consultant claimed financial expenses for a study in her home for the first time in her income tax return. After an initial examination of the facts, the tax office requested a sketch of the apartment. The responsible officer considered the sketch to be in need of clarification, probably due to the lack of a bedroom, which is why he asked a flank protection inspector to visit the property. Without prior notice, the official went to the apartment, identified himself to the business consultant as a tax investigator and entered the property to be inspected. There was no objection from the taxpayer. However, the citizen brought an action for a declaratory judgment. The inspection was unlawful. The tax court dismissed the action at first instance. Due to the taxpayer's consent, there was no violation of fundamental rights and consequently no interest in a declaratory judgment.
Federal Fiscal Court: Inspection was unlawful
The Federal Fiscal Court ultimately ruled that the unannounced inspection by the flank protection inspector was unlawful. Due to the risk of repetition due to a move in the near future, there was sufficient interest in a declaratory judgment. Furthermore, the inspection was not proportionate and was only necessary in the home of a taxpayer willing to cooperate if the existing doubts could not be dispelled by further information or evidence such as photographs. Even if there is no serious interference with fundamental rights because, as in the specific case, the inspection was consented to, this principle applies. Furthermore, the inspection was unlawful as it was not carried out by an employee of the assessment office but by a tax investigator. The deployment of a tax investigator is generally perceived as more incriminating than that of an assessment officer. If third parties who happen to be present could believe that the taxpayer is under investigation, their personal reputation could be jeopardized. This circumstance should be avoided.
