Federal Constitutional Court: Six percent tax rate unconstitutional | free press


Karlsruhe (dpa) – The high tax rates of six percent a year are unconstitutional given the persistent low interest rates since 2014.

The Federal Constitutional Court in Karlsruhe announced on Wednesday that this applies to interest on tax arrears and refunds. It ordered a retroactive correction, which, however, only affects all tax assessments that are not yet final for interest periods from 2019. The legislator has until July 31, 2022 for the new arrangement.

There is interest in income, corporate, wealth, sales and trade taxes. They become due if an overdue payment or refund is delayed by more than 15 months. In the first case, the tax authorities benefit, in the second case, the taxpayer. The level has remained unchanged at six percent for decades.

In the historically low interest rate phase following the outbreak of the financial crisis in 2008, this has led to a much-criticized imbalance: because interest rates should compensate for potential gains currently unattainable on the capital market at this level .

Since the Karlsruhe decision also includes refunds, not all taxpayers are likely to benefit from it. Anyone who had to repay should get a portion of the interest back. But those who have received too much tax back from the tax authorities 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 effect. Here the legislator is not obliged to establish a constitutional regulation with retroactive effect. In the years up to 2013, the general interest rate had already fallen sharply. At that time, however, the fixed interest rate was “still in the right proportion,” it says. But since 2014 at the latest it is “apparently unrealistic”.

The Federal Fiscal Court also questioned the constitutionality of the high interest rates in 2018. Due to these decisions and the unclear legal situation, the Tax and Customs Administration has only provisionally set the interest rates since May 2019. This means that the notices can now be changed retroactively. In addition, in certain cases, the authorities had temporarily waived interest collection.

In Karlsruhe, two companies had filed a lawsuit that had to pay six-figure interest after a tax audit. Because it concerned the period 2010-2014, only one of these constitutional complaints was partially granted.