The Federal Constitutional Court considers the lavish tax office interest to be unconstitutional.
Many taxpayers who were once in default are now awaiting repayments.
Karlsruhe - The high tax rates of six percent per year are unconstitutional in view of the ongoing low interest rate phase since 2014. The Federal Constitutional Court in Karlsruhe announced on Wednesday that this applies to interest on back tax payments and refunds. It ordered a retrospective correction, which, however, only affects all tax assessments that are not yet final for interest periods starting in 2019. The legislature has until July 31, 2022 for the new regulation. (Az. 1 BvR 2237/14 etc.)
There is interest in income, corporation, wealth, sales and trade tax.
They become due if a back tax payment or refund is delayed.
In the first case the tax authorities benefit, in the second the taxpayers.
The level has remained unchanged at six percent for decades.
In the historic low interest rate phase after the outbreak of the financial crisis in 2008, this resulted in a much-criticized imbalance: Because interest rates are supposed to compensate for potential profits that cannot be achieved at this level on the capital market at the moment.
Federal Constitutional Court: Not all taxpayers will benefit
Since the Karlsruhe decision also includes reimbursements, not all taxpayers will probably benefit.
Anyone who had to pay back should get part of the interest back.
But those who have received back taxes that have been paid too much by the tax office may have to repay some of the interest.
Federal Constitutional Court: Tax office interest rate since 2014 "evidently unrealistic"
For the period from 2014 to 2018, the judges of the First Senate left the disputed provision in force.
Here the legislature is not obliged to retrospectively create a constitutional regulation.
In the years up to 2013, general interest rates had already plummeted.
At that time, however, the fixed interest rate was "still in the right proportion," it said.
Since 2014 at the latest, however, it has been "evidently unrealistic".
Tax office interest: Tax notices can now be changed retrospectively
The Federal Fiscal Court also questioned the constitutionality of the high interest rates in 2018. Because of these decisions and the unclear legal situation, the tax offices have only set the interest rates provisionally since May 2019. This means that the notices can now be changed retrospectively. In addition, the authorities had temporarily waived the collection of interest in certain cases.
In Karlsruhe, two companies had sued that, after a tax audit, were to pay six-figure interest.
Because the period between 2010 and 2014 was involved, only one of these constitutional complaints was partially successful.
The previous law could still be applied until the end of 2018, after which the legislature would have to find a new regulation by the end of July 2022, the Federal Constitutional Court in Karlsruhe said on Wednesday.
The interest rate can no longer be justified if it turns out to be "evidently unrealistic" under changed conditions - which is the case because of the current "structural low interest rate".
At the same time, the top German judges ordered a retroactive correction from 2019.
(dpa / AFP / utz)