- Data cross-referencing is the comparison the tax administration makes of your figures received from various sources, and it takes place before any audit.
- Selection for inspection is carried out through risk analysis, in accordance with Article 80, paragraph 4, of Law No. 9920/2008.
- Your invoice goes to the platform in real time, while the statement arrives weeks or months later. The difference between them is the first signal.
- Notice before a full inspection is 30 days, before a fiscal visit 10 days, while on-site verifications are carried out without notice.
- Correction within 30 days of the inspection notice halves the fine, pursuant to Section 81.
Data cross-referencing is the work the tax administration does on your business without ever visiting it. It obtains figures for you from several independent sources, places them side by side, and checks if they match. When they don't match, your business is placed on a list.
Many owners think of a tax audit as something that starts when the inspector knocks on the door. In fact, it begins much earlier, at the table where your figures are compared with one another. Article 80, paragraph 4, of Law No. 9920/2008 grants the administration the right to conduct audits, and the selection of entities is carried out through risk analysis. The same law, in Article 12, paragraph c, establishes reducing the risk of non-compliance with legislation as a working principle for the administration.
This article explains what is reported about you throughout the year, how audits are selected, and which discrepancies raise a red flag. The self-control procedure, once it has been implemented, is covered in the linked article below.
Read also: Is your business ready for a tax audit?
What is reported about your business over the course of a year?
Business doesn't report just once a year. It leaves traces every day, and a good part of those traces aren't left by you; they're left by others on your behalf.
What do you send yourself?
Every invoice is sent to the fiscalization platform at the moment it is issued, in accordance with Law No. 87/2019. This means that Sales are recorded in real time., while the statement for the same period arrives weeks later.
Periodic statements follow. The sales and purchase books must be submitted by the 11th. By the following month, the VAT return is due by the 14th, and the payroll list with contributions by the 20th. The annual return closes on March 31, while the financial statements are submitted to the QKB by July 31.
What do others send for you?
This part is less visible and more important. The invoice you issue is a purchase for someone else, and they report it with their own figures. Your supplier does the same thing in the opposite direction.
Banks report account data in accordance with the rules on automatic exchange of financial information. Customs sends import values. The lease agreement for the premises where you operate is filed in e-Filing. On the horizon is reporting from digital platforms, which is still a draft law and not yet legally binding.
How are businesses selected for inspection?
The administration does not audit randomly and does not audit everyone. It builds a risk assessment for each entity and audits where the risk is highest. According to the official clarification of the General Directorate of Taxes, statements certified by a recognized auditing firm carry weight as a positive factor in this assessment.
Consequently, a business that regularly reports in line with what others report will drop in the rankings on its own. It's not a matter of luck.
How much warning do you get?
For a full audit notice, it is 30 days in advance. For a fiscal visit, the deadline is 10 days. On-site verifications are conducted without prior notice. All three deadlines stem from Articles 81 and 81/1 of Law No. 9920/2008.
Why is this deadline important?
Because you can still take action within it. When the correction is made within 30 days of the audit notice, the fine is applied at 50 percent, pursuant to Section 81. So the notice isn't just bad news; it's also an opportunity.
Seven discrepancies that raise a red flag
These are the cases most frequently encountered in practice. None of them means that the business has done anything wrong, but each one requires an explanation.
1. The invoiced turnover does not match the declaration. The platform knows the total amount of invoices issued. If the declaration reports a lower figure, the discrepancy is immediately apparent.
2. Your purchases don't match the supplier's sales. You report the invoice, he doesn't, or vice versa. This is the most direct cross-check there is.
3. The margin is significantly below the sector average. A store that sells at half the margin of its competitors, or reports losses for years while continuing to operate, requires an explanation.
4. The number of employees does not match the activity. A business with long hours and two declared employees, or a payroll where everyone receives exactly the minimum wage, is a mismatch between payroll list and reality.
5. Stock doesn't close out. Purchases minus sales should yield the inventory you have. When they don't, there are either undeclared sales or purchases without an invoice.
6. Cash payments are outside the limit. The limit between two businesses is 100,000 lek and between a business and an individual is 500,000 lek. Failure to install a POS terminal within the deadline falls under the same category of violations.
7. The partner withdraws money without calling it a dividend. Continuous withdrawals from the company's account without a distribution resolution are treated as a hidden dividend.
Calculated example, a single discrepancy.
A VAT-registered company has invoices totaling 12,000,000 lekë for the year recorded in its books. In its VAT returns for the same period, it declared 10,500,000 lekë. The difference is 1,500,000 lekë.
The undeclared VAT on this difference, at the standard rate of 20 percent, amounts to 300,000 lek. The penalty for an inaccurate declaration is 20 percent of the difference in the tax liability, i.e., 60,000 lek, pursuant to Article 115 of Law No. 9920/2008. If the company self-corrects within 30 days of the audit notice, the penalty is reduced to 30,000 lekë.
Late payment interest is also calculated on this. It retains the full figures of the fines. Fines and Penalties Page. The above figures are rounded and illustrative.
What can you do?
The solution isn't to declare more. The solution is to have your numbers say the same thing wherever they go.
Monthly reconciliation does the job. Once a month, four things are compared: the total of invoiced bills, the sales book, the VAT return, and the cash in the bank and the cash register. If all four match, the month is closed. If not, the discrepancy is found then, when it costs less.
The same logic applies to purchases. Any invoice that doesn't appear in your purchase ledger should be requested from the supplier within the month, not in March.
Every time there is a tax or financial change that affects your business, we notify you directly by email with a practical explanation.
Frequently asked questions
What exactly is data cross-referencing?
It is the comparison of figures that the tax administration obtains for the same business from different sources, such as point-of-sale systems, tax returns, suppliers, banks, and customs. The goal is to identify discrepancies without the need for an on-site visit.
Does a discrepancy necessarily mean that I will come in for a check-up?
No. A discrepancy increases the risk assessment; it does not determine the control itself. Many discrepancies are technical and are explained by documentation.
How much time do I have from notification to the check?
Thirty days for a full inspection and ten days for a fiscal visit. On-site verifications are without prior notice.
Will I get a reduced fine if I correct the statement myself?
Yes. When the correction is made within 30 days of the inspection notice, the fine is applied at 50 percent, in accordance with Article 81 of Law No. 9920/2008.
How far backward can the administration go?
Tax liability becomes time-barred after five years, in accordance with Article 100 of Law No. 9920/2008. Documents are retained for the period required by accounting legislation.
Does certification of statements help?
Yes. According to the official clarification from the General Directorate of Taxes, statements certified by recognized auditing firms are considered a positive factor in the risk analysis.
What is the one thing that needs to be started today?
Month-end reconciliation. Compare the total of the fiscalized invoices with the sales book and the VAT return. If all three match, you're good for that month.
Read also: What does the bank look at when you apply for a business loan?
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Read also: Digital platforms will report sellers to the Tax Authority.