Hesse's tax administration: Digitalization and AI are setting records!

Hesse's tax administration: Digitalization and AI are setting records!

On May 23, 2025, the Hessian tax administration published its current performance balance. Finance Minister Professor Dr. R. Alexander Lorz describes the authority as modern, digitalized and innovative. The role of tax administration is essential to the state, especially given the ongoing challenges posed by changing tax laws. This is particularly clear from the additional tax revenue of 1.6 billion euros generated, which was achieved through tax audits and tax investigations.

The focus is on the innovative use of artificial intelligence (AI) in tax administration. A significant project is the use of AI to solve suspected cum-cum cases, which is seen as a step towards justice. The Artificial Intelligence Research Center in Kassel, which employs 40 people and is continuing to expand, has already successfully implemented numerous AI projects. Chief Finance President Konstanze Bepperling highlights the digitalization in the Hessian tax administration, which is reflected, among other things, in a high ELSTER quota and faster processing times for income tax returns - with an average of 44 days.

Innovations through artificial intelligence

The tax audit achieved an additional result of 1.34 billion euros in 2024, while the tax investigation contributed 253.4 million euros. The Artificial Intelligence Research Center (FSKI) at the Kassel tax office plays a central role in the implementation of AI technologies, including through the KICC project, which aims to specifically identify suspected cases. These developments are not only the focus in Hesse; The entire tax industry is undergoing significant change through digital transformation and the use of AI.

How egovernment.de reports, global trends show that digital solutions, such as structured data exchange, are enabling tax authorities to conduct more sophisticated audits. In countries like France, almost 50% of all tax audits are already AI-powered to combat fraud and automate processes. This could also be groundbreaking in Germany, as Finance Minister Lindner emphasizes, who sees the potential to employ a third fewer staff in tax administration by 2030.

Challenges caused by digitalization

However, digitalization is not only required by authorities, but also by companies. They face the challenge of improving their data analysis and adapting their systems to the new digital requirements in order to avoid fines and business interruptions. In addition, policymakers have not yet implemented uniform systems for electronic invoicing. Important decisions are already planned: from 2026, for example, electronic invoicing in the B2B sector will be mandatory in Belgium. In France, a central platform for electronic invoicing is planned for 2026.

To meet the new requirements, companies should bring in experts in digital control systems and collaborate across functions. Digitalization in taxation requires a central compliance level for all affected systems and processes. At the same time, the use of AI gives companies the opportunity to efficiently analyze business data in order to make informed decisions and ultimately improve their business results.