Federal Ministry of Finance Presents Draft Bill on Mandatory Use of Electronic Cash Registers and Combating Tax Evasion

In July 2026, the Federal Ministry of Finance (BMF) and the Federal Ministry of Justice (BMJV) presented an action plan to combat tax and financial crime, comprising 26 measures. The draft bill dated August 5, 2026, to introduce mandatory cash register use, combat tax evasion, and further digitize tax law implements several points of the action plan.

In particular, the draft includes the following changes:

• Requirement to use a cash register for businesses with annual sales of 100,000 euros or more
• Elimination of the requirement to issue paper receipts effective January 1, 2028
• New criminal offense for the use or distribution of tampering software
• Waiver of tax confidentiality in cases involving certain economic crimes and
• Inclusion of convictions for tax offenses in the Central Business Register

Mandatory Use of Cash Registers, Electronic Recording Systems, and Cash Register Tampering

A cash register requirement is to be introduced for taxpayers with income from profits: Anyone who operates an agricultural, forestry, or commercial business, or who is self-employed, and whose total annual revenue exceeds 100,000 euros in a calendar year must, in the future, use an electronic recording system as defined in Section 146a of the German Fiscal Code (AO). The use of an open cash register will then no longer be permitted. Exceptions will be regulated by a regulation.

In the future, the use, promotion, and distribution of programs designed to manipulate electronic recording systems will be punishable as a tax offense carrying a sentence of up to five years’ imprisonment or a fine. The offense will also be added to the list of tax crimes (Section 369(1) AO-E). Until now, the criminal liability of software providers was contingent on proof of involvement in a specific instance of tax evasion. With the removal of this link to a specific predicate offense, criminal liability is shifted well into the preliminary stages of potential tax evasion. Software companies and their responsible parties may therefore be held criminally liable even if not a single taxpayer has actually used the relevant software to evade taxes. Since § 374a AO-E is classified as a tax offense, the expanded powers of tax investigators also apply.

Section 386(2) of the Draft Tax Code (AO-E) expands the tax authority’s power to conduct independent investigations. In the future, tax investigation units and departments handling administrative fines and criminal matters will also be able to independently investigate the falsification of technical records, provided that such falsification is committed in connection with an electronic recording system.

Effective January 1, 2028, the requirement to issue paper receipts will be replaced by the obligation to provide receipts in a standardized data format (Section 146a(2) of the Draft German Fiscal Code (AO-E)). Exceptions are to be made for the sale of goods to a large number of unknown individuals, but not for services.

Delay Penalty and Relocation Penalty

Violations of tax compliance obligations are to be penalized more consistently. Anyone who fails to grant the access to data required by law will, in the future, be subject to a mandatory late-payment penalty. The tax authorities will then have discretion only regarding the amount of the penalty. In addition, late payment penalties and relocation penalties for violations related to the relocation of electronic accounting abroad may be imposed concurrently in the future. This increases the financial risk for companies.

Waiver of Tax Secrecy for the Prosecution of Non-Tax Crimes

Tax authorities are already authorized to provide the public prosecutor’s office with information relevant to criminal proceedings for non-tax offenses. An explicit authority or obligation to report exists, among other things, when there are indications of corruption, illegal employment, benefit fraud, and money laundering.

Furthermore, the tax office may disclose information that the taxpayer has provided in fulfillment of his or her obligation to cooperate in the tax assessment proceedings to the public prosecutor’s office for the purposes of criminal prosecution only if there is a compelling public interest. Such an interest exists, in particular, in the case of a serious economic crime if it is likely to significantly disrupt the economic order or significantly undermine confidence in the integrity of commercial transactions. Whether these conditions are met must be assessed based on all the circumstances of the individual case.

In the future, tax authorities will be permitted to disclose tax-related information to law enforcement agencies without any further conditions, even if there is suspicion that the offense is one of the offenses listed in § 74c(1)(1) through (3), 5, or 6 of the German Code of Criminal Procedure (GVG). These include, among others, offenses related to intellectual property law, insolvency and corporate criminal law, banking and capital markets supervisory law, foreign trade law, subsidy, investment, and credit fraud, bankruptcy offenses, as well as money laundering, fraud, and embezzlement.

The idea of drawing on the list set forth in Section 74c of the German Code of Civil Procedure (GVG) is at least as old as the German Tax Code itself. The proposal was already rejected during the legislative process in 1975 as going too far. Accordingly, even according to the Federal Ministry of Finance’s (BMF) current view, a compelling public interest does not exist merely because the case falls under the jurisdiction of the regional court pursuant to § 74c GVG. Rather, it must be examined in each individual case, after weighing the interests involved, whether a compelling public interest exists (No. 11.2.2 regarding § 30 AEAO).

At the same time, the Federal Ministry of Finance (BMF) also intends to lower the threshold for the use of this information by public prosecutors and courts. In the future, such use will be permitted not only in cases of compelling public interest, but also whenever there are indications of corruption offenses, illegal employment, benefit fraud, and money laundering, as well as in cases involving the offenses listed in § 74c(1)(1) through (3), 5, or 6 of the German Code of Criminal Procedure (GVG). This proposal is also noteworthy because the current version of Section 393(2), sentence 2, of the German Fiscal Code (AO) is already considered unconstitutional by a large portion of the legal literature, at least to the extent that information provided by the taxpayer (beyond the submission of records required by law) is to be used to the taxpayer’s detriment.

Tax offenses are to be entered in the Central Business Register

Convictions for tax offenses are to be entered into the Central Business Register in the future. They would thus be included in official background checks and could have an impact on business licenses. In individual cases, business bans or the revocation of licenses for activities requiring authorization may also be considered. The prerequisite for entry in the register is a conviction resulting in a fine of more than 90 daily rates or a prison sentence of more than three months. To date, only final administrative fine decisions—including those for tax administrative offenses—as well as criminal convictions under the Act to Combat Illegal Employment, the Temporary Employment Act, and for withholding or embezzling wages are entered into the Central Trade Register.

Conclusion

The draft bill further shifts the balance between tax compliance and criminal enforcement in favor of law enforcement agencies. It is still a draft. The public comment period for industry associations runs through August 13, 2026. Should the proposals become law, it will be necessary to take into account—in the context of corrections and voluntary disclosures—that the disclosed information may be passed on to law enforcement authorities and used by them more frequently than before. In appropriate cases, legal action may be taken against the transfer of data or its subsequent use. Whether the proposed regulation is compatible with the principle against self-incrimination will have to be clarified by the courts. The inclusion of convictions for tax offenses in the Central Trade Register should be factored into defense strategies at an early stage.

Co-author: Dr. Volodymyr Izrailevych