(2025)
What records are required?
The net income method (EÜR) is based on simple records that capture all income and expenses for a year. According to the cash basis accounting principle, business income is recorded in the year it is actually received, and business expenses in the year they are paid.
Unlike double-entry bookkeeping or a balance sheet, you do not need to prepare a complex profit and loss statement or conduct an inventory. The way you collect your receipts and record your figures is largely up to you.
However, it is important not to use a single category for business income and expenses. Especially for larger businesses, you should divide the items according to the structure of the "Form EÜR" in the tax form to ensure a clear and correct presentation.
Recording of income
Even as a profit and loss calculator, you are required to record your income individually for VAT purposes (§ 22 para. 2 UStG; BFH ruling of 26.02.2004, BStBl. 2004 II p. 599). You must list
- VAT-liable income with net amounts and associated VAT, separated by tax rates (7%, 19%),
- VAT-free income.
Separate records of business expenses
Certain business expenses must be recorded separately from other business expenses, as they are only deductible to the legally prescribed extent (§ 4 para. 7 EStG). These include
- entertainment expenses at 70%,
- gifts up to 50 Euro per year and business associate,
- costs of a home office (only if it is the centre of all activities),
- withdrawals and deposits if you wish to deduct interest expenses exceeding the basic amount of 2.050 Euro as business expenses.
Asset register
In an asset register, you must continuously record the following assets with their acquisition or production costs and the date of their acquisition, production or deposit (§ 4 para. 3 sentence 5 EStG):
- non-depreciable fixed assets, such as land, investments, other financial assets, non-depreciable intangible assets.
- depreciable fixed assets acquired, produced or deposited into business assets after 05.05.2006. This applies to assets with acquisition or production costs of more than 1.000 Euro net (for acquisitions from 01.01.2008).
- certain current assets acquired, produced or deposited into business assets after 05.05.2006. This applies to shares in corporations, securities and comparable non-certificated claims and rights, land and buildings in current assets.
Note: In this asset register, for depreciable fixed assets (e.g. company cars, PCs, office furniture, etc.), the book values at the beginning and end of the financial year, as well as the corresponding depreciation amounts and any special depreciation under § 7g EStG, must also be entered.
A further special inventory is required for low-value assets. Those acquired or produced between 2010 and 2018 must
- not be recorded up to 250 Euro net (up to 2017: 150 Euro) (they are immediately depreciated) and
- be recorded in a special account from 250.01 Euro (up to 2017: 150.01 Euro) to 1.000 Euro net and depreciated as a collective item over 5 years.
Withdrawals and deposits
These must be recorded separately if "other interest on debt" has been incurred for business loans. Otherwise, the deduction of interest on debt is limited to the interest for financing fixed assets and other interest up to only 2.050 Euro (§ 4 para. 4a sentence 6 EStG).
Investment deduction
Special records are required if you wish to deduct an investment deduction. This is possible if the profit - without the investment deduction - is not higher than 200.000 Euro.
Home office
For self-employed individuals claiming a home office for tax purposes, specific recording obligations apply under § 4 para. 7 EStG. These obligations concern the recording of costs attributable to the home office. However, it is acceptable to estimate these costs and then document them after the end of the financial or calendar year using the annual statement from the financial institution. This also applies to consumption-dependent expenses such as water and energy costs.
For depreciation amounts, it is sufficient to record them once a year promptly after the end of the respective calendar or financial year. The special recording obligations under § 4 para. 7 EStG do not apply for the deduction of an annual flat rate.
Profit and loss calculators are not generally subject to special legal recording obligations. HOWEVER: A recording obligation may arise under the VAT Act or the "Principles for the proper management and storage of books, records and documents in electronic form and for data access (GoBD)". Entrepreneurs are required to record non-cash transactions within ten days. Cash receipts and payments must be recorded daily. Information must not be lost, so an orderly filing of incoming and outgoing invoices and systematic recording of payments is required. This is usually done by continuously numbering and coding incoming and outgoing invoices, filing them in special folders, or through electronic records. Subsequent changes in accounting, such as cancellations or corrections, must be clearly documented. Therefore, do not forgo ongoing records even as a profit and loss calculator.
Important: As an entrepreneur, you must store all documents, including MS Office documents, PDF files and emails, in a way that ensures they cannot be altered afterwards. This means that subsequent changes to electronic documents, even unintentional ones, must be excluded, or traceability through a complete change history must be ensured. Therefore, store electronic documents in a document management system.
