Federal Constitutional Court – decision on interest rates costs less than a billion euros – savings

According to the decision of the Constitutional Court, the Federal Ministry of Finance expects excessive interest on additional tax claims with charges well below one billion euros. A spokesperson for the SPD-led ministry said Friday. Another spokesperson told the government press conference in Berlin that the effects cannot yet be reliably estimated as it depends on the specific design of the law change. Federal and state governments are affected.

After this week’s decision, tax authorities will have to lower their interest rates on tax arrears. So far, they have been around six percent per year. Anyone who owes the taxman money has to pay much higher interest than on a mortgage or similar loans, which have become significantly cheaper due to the zero interest rate policy of the European Central Bank (ECB). Federal and state governments now have until July 31, 2022 to find new regulations. The six percent interest rate was introduced in 1961 and has remained unchanged for almost 60 years. The state earns around one billion euros per year thanks to default interest.

According to a report by Spiegel, the Federal Ministry of Finance fears additional charges that could exceed 30 billion euros due to high interest rates on companies’ pension provisions. Lawsuits are expected here, according to the magazine. The finance ministry spokesman denied the number and pointed out that there was only a judgment on tax claims.

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