Retention obligation refers to the statutory duty to retain certain business records for specified periods. For freelancers and small businesses in Germany, the Abgabenordnung (AO) and the Handelsgesetzbuch (HGB) in particular regulate the retention periods and scope. Correct retention is central to proper accounting, tax audits by the tax office, and protecting your business.
Which documents are affected and what periods apply?
Retention obligations vary by document type and legal basis. In principle, the following rules apply:
Overview of periods
- 10 years: books, inventories, annual financial statements, opening balance sheets, accounting vouchers, incoming and outgoing invoices, and all documents relevant for taxation (see §147 AO, §257 HGB).
- 6 years: business correspondence, received and sent trade or business letters, and other documents with less long-term tax relevance (see §257 HGB).
Example: An incoming invoice dated 5 June 2023 must be retained for ten years—i.e. until 31 December 2033. A business letter dated 10 April 2023 must be retained for six years—i.e. until 31 December 2029.
Practical implementation in accounting
The retention obligation has a direct impact on your day-to-day accounting and archiving. Key aspects are digitization, an organizational system, and access protection.
Electronic retention
- Observe the GoBD: The Principles for properly maintaining and storing digital records (GoBD) require audit-proof procedures, immutability, traceability, and full documentation of processes.
- Scanning paper documents: Scans are permitted if they are complete, legible and stored in an unalterable way. The GoBD requirements must be met; thereafter the paper original can be destroyed under certain conditions.
- Archiving systems: Use an audit-proof archive (e.g. with WORM functionality or certified cloud services) and document access rights as well as backup strategies.
Organization and workflow
- Keep a retention register that lists document type, date and retention period.
- Separate documents by type (invoices, payroll records, contracts) and arrange them chronologically.
- Formalize processes: who scans, who verifies, where backups are stored—these procedures should be documented in writing.
Concrete use cases and examples
Practical examples help implement the obligation and avoid typical mistakes.
- Freelancers, e.g. graphic designers: Systematically file incoming invoices for software licenses (10 years) and proposals to clients (6 years); assign reference numbers to digital documents.
- Small trading business: Cash records and daily reports are part of the accounting records and must be retained for 10 years; electronic cash registers must be operated in compliance with the GoBD.
- Payroll records: Personnel files, payroll and salary records are generally to be retained for 10 years due to tax and social security relevance.
Consequences of violating the retention obligation and recommendations
Non-compliance can have significant consequences. The tax office can demand documents, make estimates under §162 AO, or impose late filing penalties and fines. In individual cases, criminal consequences may result from the intentional destruction of tax-relevant documents.
Recommendations to minimize risk
- Establish a written retention policy.
- Use certified software solutions and document all processes (scan logs, backup plans).
- Train employees on retention periods and data protection.
- When switching to digital archiving: obtain tax advice to ensure GoBD compliance.
In summary: the retention obligation is indispensable for tax protection. With clear procedures, audit-proof archives and regular checks you ensure that you pass audits and minimise financial risks. If in doubt, consult a tax advisor who will adapt your documentation and archiving processes to current legal requirements.