The high tax rates of six percent per annum are unconstitutional given the low interest rate phase that has been going on since 2014. This applies to interest on tax arrears and tax refunds, a announced the Federal Constitutional Court in Karlsruhe. He ordered a retrospective correction, which however only affects all tax assessments that are not yet final for the periods of interest starting in 2019. The legislator has until July 31, 2022 for the new regulation (Ref .: 1 BvR 2237/14 and others).
There is an interest in income, corporations, wealth, sales, and trade taxes. They become due if an arrears or a tax refund is delayed by more than 15 months. 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 phase of historically low interest rates after the onset of the financial crisis in 2008, this resulted in a much criticized imbalance: Because interest rates are supposed to offset potential profits that cannot be realized at this level in the capital market yet.
Since the Karlsruhe decision also includes refunds, not all taxpayers will likely benefit. Anyone who has had to repay should get some of the interest back. But those who have received too much tax from the tax office may have to repay part of the interest.
For the period from 2014 to 2018, the judges of the First Senate left the disputed provision in force. Here, the legislator is not obliged to retrospectively create a constitutional regulation. In the years leading up to 2013, general interest rates had already fallen. At that time, however, the fixed interest rate was “always in the right proportion,” he said. As of 2014 at the latest, however, it is “patently unrealistic”.
The Federal Finance Court also questioned the constitutionality of the high interest rates in 2018. Due to these rulings and the unclear legal situation, the tax administration only fixed interest rates in such a way. provisional since May 2019. This means that notices can now be changed retrospectively. In addition, the authorities had temporarily waived interest charges in some cases.
In Karlsruhe two companies sued which, after a tax audit, had to pay six-figure interest. Due to the period between 2010 and 2014, only one of these constitutional complaints was partially upheld.