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This article was written by
Certified Tax Advisor, Manager, National Office Tax & Legal
Senior Consultant, National Office Tax & Legal
The first draft bill on the introduction of a cash register requirement, the prevention of tax evasion and the further digitalization of tax law published by the German Federal Ministry of Finance (Bundesfinanzministerium; BMF) on August 7, 2026 provides, among other measures, for the mandatory use of electronic cash register systems by taxpayers generating business income, subject to a turnover threshold. It also proposes replacing the obligation to issue paper receipts with an obligation to provide electronic receipts, enhancing tax authorities’ data access rights during tax audits, and criminalizing the use of manipulation software. We provide an overview of these and other key measures of the first draft bill.
Pursuant to the Section 146b of the German Fiscal Code-draft (Abgabenordnung-Entwurf; AO-E), taxpayers operating an agricultural or forestry business, a commercial enterprise, or carrying out professional self-employed activities must use an electronic record-keeping system if their total annual turnover within the meaning of Section 19 (2) sentence 1 of the German VAT Act (Umsatzsteuergesetz; UStG) exceeds EUR 100,000 in a calendar year.
The electronic record-keeping system must comply with the requirements of Section 146a (1) AO. Accordingly, it must record each transaction subject to documentation requirements (including all business income, expenses, withdrawals, contributions and pass-through items involving cash payments or payments by debit or credit card) individually, completely, accurately, in a timely manner and in an organized fashion. In addition, the system must be protected by a certified technical security device and be capable of generating records in accordance with the digital interface of the tax administration for cash register systems (DSFinV-K).
Various technical solutions remain permissible, including electronic cash registers, integrated point-of-sale systems and cloud-based cash register solutions. However, taxpayers subject to the new rules will no longer be allowed to record cash receipts and payments exclusively by means of a so-called open cash drawer system (offene Ladenkasse).
The planned cash register requirement will apply from January 1, 2028 where the turnover threshold has already been exceeded in the 2027 calendar year or earlier.
Where the threshold is exceeded for the first time in 2028 or later year, the requirement will commence on April 1 of the following calendar year. The taxpayer must notify the competent tax office within one month after becoming subject to the cash register requirement.
The requirement will cease at the end of the third consecutive calendar year in which total turnover does not exceed EUR 100,000. This three-year observation period is intended to prevent short-term fluctuations in turnover from triggering repeated transitions between an open cash drawer system and an electronic record-keeping system.
Tax authorities may grant exemptions from the cash register requirement on a case-by-case basis under Section 148 AO (“Approval of relief measures”) where compliance would constitute an unreasonable hardship. According to the explanatory memorandum to the first draft bill, this may be the case, for example, where the turnover threshold is exceeded solely because of additional activities that are not relevant from cash register perspective, such as rental and leasing activities, or due to a one-off event. Furthermore, the BMF is to be authorized to provide for general exemptions by statutory ordinance, subject to the consent of the German Federal Council (Bundesrat).
As of January 1, 2028, the existing requirement to issue paper receipts is to be replaced by a requirement to provide electronic receipts. Under Section 146a (2) AO-E, an electronic receipt in a standardized data format must be made available to the customer immediately in connection with each transaction subject to record-keeping requirements. Possible methods include QR codes, download links, Near Field Communication (NFC), e-mail delivery or customer accounts.
Customers will not be required to accept electronic receipts. Moreover, customers will continue to have the right to request a paper receipt.
For transactions involving a large number of unidentified customers, exemptions may continue to be granted where issuing receipts would be considered unreasonable.
Violations relating to the relocation of electronic bookkeeping systems to third countries may in future be sanctioned by a relocation penalty ranging from EUR 2,500 to EUR 100,000 (instead of up to EUR 250,000 under current law) pursuant to Section 146 (2c) AO-E. In addition, a delay penalty ranging from EUR 2,500 to EUR 250,000 may continue to be imposed for non-compliance with data access obligations under Section 147 (6) AO. However, the legal basis will be moved from Section 146 (2c) AO to Section 200 (2a) AO-E. Where both the requirements for a relocation penalty and a delay penalty are met, both penalties may be imposed cumulatively.
These changes are generally intended to apply to taxes arising after December 31, 2027. They will also apply to taxes arising before January 1, 2028 where a tax audit order is issued after December 31, 2027.
Taxpayers who fail to use a compliant electronic recording system despite being subject to the cash register requirement may be fined up to EUR 25,000 from January 1, 2028 onwards (Section 379 (1) sentence 1 no. 6a AO-E).
Furthermore, Section 374a AO-E introduces a separate criminal offence covering the use, promotion and distribution of software designed to manipulate electronic recording systems. Violations may be punishable by a fine or imprisonment for up to five years. This provision is intended to take effect on the first day of the quarter following the promulgation of the law.
In addition, responsibility for conducting unannounced cash register inspections (Kassen-Nachschau) will be expanded to include the tax authority in whose jurisdiction the taxpayer is carrying on business (Section 146c (1a) AO-E). This change is intended to facilitate inspections of mobile traders, exhibitors at trade fairs, market vendors and similar businesses. The new rule is likewise intended to take effect on the first day of the quarter following promulgation of the law.
Subject to the applicable statutory requirements, annual financial statements and opening balance sheets may be digitised and subsequently stored electronically (Section 147 (2) AO-E). This will apply to all records whose retention period has not expired by the first day of the quarter following promulgation of the law.
Changes of a certified technical security device must be reported electronically within one month from January 1, 2028 onwards (Section 146a (4) sentence 2 AO-E).
From January 1, 2029, rental vehicles and certain vehicles used in pooled on-demand passenger transportation services, including taxis, must be equipped with an odometer capable of interfacing digitally with a certified technical security device.
Businesses should assess at an early stage whether their turnover exceeds the EUR 100,000 threshold and which transactions would be required to be recorded through an electronic recording system in the future. As the planned rules cover not only cash payments but also payments made by debit or credit card, the planned changes will affect not only traditionally cash-intensive businesses but potentially also enterprises whose transactions are predominantly card-based.
By publishing the first draft bill, the BMF has formally initiated the legislative process. Amendments therefore remain possible and, according to numerous professional and business associations, necessary. In statements published on August 13, 2026, for example by the German Federal Chamber of Tax Advisers (BStBK) and the six leading associations of German industry, criticism was raised that imposing a mandatory electronic cash register requirement on all taxpayers generating business income solely by reference to a turnover threshold, without distinguishing between cash and non-cash transactions, may go beyond what is necessary and proportionate.