Interest – tax arrears – tax consultants – Hagen – Holzwickede – Kamen – Lünen – Dortmund

Interest is charged on tax arrears or refunds resulting from income tax, corporate income tax, trade tax and VAT assessments – after a grace period of regularly 15 months – at a statutory interest rate of 0.5% for each full month (cf. Sections 233a and 238 of the German Fiscal Code (Abgabenordnung)).

In a recent ruling, the German Federal Fiscal Court decided that this regulation is not objectionable – also with regard to the amount of interest (6% p.a.).

In the case in question, a taxpayer had filed an action against the assessment of interest on arrears. In view of the expected substantial additional income tax payment of several 100,000 euros, the plaintiff had in the meantime made a voluntary (lower) payment to the tax office.

The Federal Fiscal Court confirmed the interest with regard to the remaining tax arrears determined after taking into account the voluntary payment.

In the opinion of the court, there was also no infringement of the principle of proportionality, as the interest rate of 6% p.a. – at least for 2013 – was within the range of interest rates for short- and long-term deposits and loans based on information from the Deutsche Bundesbank.