provisional assessment

noun · Vorbehalt der Nachprüfung

German assessments come in three states and English has one adjective for them. An assessment under Vorbehalt der Nachprüfung, § 164 AO, can be changed in every respect at any time; one declared vorläufig under § 165 AO is open only on the specific point named; and a plain assessment is final subject to the narrow correction provisions.

Which translation, when

Vorbehalt der Nachprüfungfully open: as long as the case has not been finally examined, the tax may be assessed subject to review, and the assessment can then be amended or cancelled in its entirety at any time, on the office’s initiative or on the taxpayer’s application, so neither side is bound by the figures; the reservation must be stated in the notice and can be lifted separately.

Vorläufigkeitopen at one point only: where it is uncertain whether the conditions for the tax have arisen, the assessment may be issued provisionally, and the notice must state the extent and the ground of the provisional character, so everything outside that point becomes final while the named question stays open, typically pending litigation before the higher courts.

das Ende beider Zuständewhen they expire: both the reservation and the provisional character fall away when the assessment period expires, which is why the limitation of assessment entry decides how long an open assessment really stays open, and the ordinary correction provisions govern a plain notice that carries neither.

Why

Provisional assessment is a phrase that flattens a distinction German tax procedure makes with care, and the distinction decides what a taxpayer can still achieve. The first state is the Vorbehalt der Nachprüfung under § 164 AO. So long as the case has not been conclusively examined, the tax may be assessed subject to review, and an assessment carrying that reservation can be amended or cancelled in every respect at any time, by the office of its own motion or on the taxpayer’s application. Nothing about the notice is settled, which is why routine assessments in ongoing business are issued this way and why a taxpayer who discovers a mistake in his own favour can still raise it. The reservation must appear in the notice and can be lifted by a separate act, at which point the assessment becomes an ordinary one. The second state is the Vorläufigkeit under § 165 AO. Where it is uncertain whether the conditions for the tax have arisen, typically because a question is pending before the constitutional or federal fiscal court, the office issues the assessment provisionally and must state the extent and the ground of the provisional character. Everything outside that stated point becomes final immediately, so a taxpayer relying on provisionality to reopen an unrelated issue is disappointed. The third state is the plain assessment, which stands unless one of the narrow correction provisions applies. Both open states end when the assessment period expires, so how long an assessment really remains open is answered by the limitation of assessment entry rather than by the notice itself.

Typical mistakes

An assessment under Vorbehalt der Nachprüfung is open in every respect while a vorläufig one is open only on the stated point, so one English adjective for both misstates what can be changed.
The provisional character must state its extent and ground, so everything outside that point is already final.
Both states end with the expiry of the assessment period, so an open assessment does not stay open indefinitely.

What matters

Reading a German tax notice for a client: the first check is whether it carries the reservation of review, a stated provisional point or neither, since that determines whether and how far the assessment can still be changed.

Authority

§ 164 AO
§ 165 AO

What the machine misses

The engine renders provisional assessment as vorläufiger Bescheid for every open notice, and German separates the reservation of review under § 164 AO, which leaves the assessment open in every respect, from the provisional character under § 165 AO, which opens only the stated point; the single adjective tells the reader nothing about what can still be changed.

See what the machine does with this clause →

Examples

the assessment is subject to review	der Bescheid steht unter dem Vorbehalt der Nachprüfung
a provisional assessment	eine vorläufige Steuerfestsetzung
the reservation was lifted	der Vorbehalt wurde aufgehoben
the notice states the ground of the provisional character	der Bescheid nennt den Grund der Vorläufigkeit