During the preparation and submission of tax returns and the subsequent assessment at the tax office, additional tax services may be incurred if you neglect tax obligations. Thus, the late submission of the tax return leads to the late payment surcharge and the late payment of the established tax liability leads to the late payment surcharge. For older tax refunds as well as tax back payments, interest can be due – also in their favor. In addition, however, there are other tax benefits, such as periodic penalty payments and delay payments, of which only a few are generally known or widely used in practice. However, what are exactly tax-related benefits and what conditions must be given in order to collect them, read in this article.

Tax ancillary services are a generic term for all monies and surcharges that can be charged by the tax office apart from the fixed tax. For example, if you submit your tax return after the statutory deadline, then the tax office can charge a delay surcharge. However, ancillary tax services do not primarily serve as an additional source of revenue for the State, but are intended to direct taxpayers to certain acts or omissions; they have a predominantly steering function. For example, ancillary tax services are intended to encourage taxpayers to submit their tax return in good time. It can therefore be said that ancillary tax services are a means of pressure by the tax office, so that the taxpayer fulfills his obligations (on time). However, there are also tax benefits that are neither coercive nor serve as an additional source of income for the Treasury. But more on that later.

2. ancillary tax services: delay surcharge

The tax office charges a delay surcharge if you submit your tax return late. In principle, tax returns must be submitted by the end of the legal period. In some cases, the tax office can also order an earlier submission of the tax return, as far as it seems necessary. This is the case, for example, in the case of start-ups or restructuring of companies. However, the delay surcharge has no meaning for tax declarations (sales tax, payroll tax).

The statutory provisions on the delay surcharge have changed from the assessment year 2019, so that a distinction must be made between before and after the change of the law.

The old regulations still apply for assessment periods until 2018. Here was the statutory deadline for submitting a tax return the 31.12. of the following year. So you had exactly twelve months to submit your tax return – but this only applies to taxpayers who had commissioned a tax consultant. For taxpayers who prepare their own tax return, the submission by the end of May (five months) is the legal deadline.

The delay surcharge was a discretion of the tax office until 2018, that is, the tax office could decide whether you set a delay surcharge or not. This depended, among other things, on how the taxpayer had so far fulfilled his obligations. So if taxpayers had to pay more tax-related services before, the probability was high that a delay surcharge was added when the tax returns were submitted late.

The assessment periods from 2019 enjoy a higher statutory deadline for filing the tax return. The two old deadlines were each increased by two months. Tax consultants can submit their clients’ income tax returns by the end of February of the second following year (14 months after the end of the tax assessment period) and taxpayers who prepare their own tax returns can submit them by the end of July (six months after the end of the tax assessment period).

In addition, the imposition of a delay surcharge is now a must. The tax office must collect the delay surcharge as soon as the conditions are met.

The delay surcharge is 0.25% of the additional payment amount (fixed tax less advance payments made) per month of the delay, but at least EUR 25.

In addition to the late submission of the tax return, it may also happen that the tax back payments do not arrive at the tax office on time. Therefore, the legislator substantiates this failure of tax payments with a default surcharge. The late payment surcharge is 1% of the arrears tax amount – rounded off to an amount that is divisible by EUR 50. For example, a tax back payment of EUR 1,892 rounds off to EUR 1,850. If you have to pay 1 % of this as a default surcharge, then the default surcharge is EUR 18.50. However, if the late payment surcharge is only valid for six months, it is EUR 9.25.

However, there is a grace period of three days (except for cheque payment) in which the late payment surcharge does not apply, provided you pay the tax liability within these three days.

Both outstanding tax back payments and tax refunds are paid interest from the 15 month after the assessment period expires. This means that tax back payments for 2018 will be made from 1. interest will be paid in March 2020 – of course only if outstanding tax amounts and these have not already been repaid by advance payments or tax withholdings. Interest is also paid on outstanding tax refunds in favour of the taxpayer. According to § 238 AO, tax interest is paid at an interest rate of 6% per year, which is an above-average interest rate today.

Since the interest rate of 6% per year is not up-to-date, the Bundesfinanzhof (BFH) has already expressed its doubts about the amount of the interest rate in several proceedings in 2018 and submitted this question to the Federal Constitutional Court. But now a decision has been made that confirms that the interest rate on taxes of 6% annually is unconstitutional. Interest as tax benefits in themselves, on the other hand, are constitutionally harmless.

Because interest is actually only intended to take away a financial advantage that arises from the absence of a tax payment. Previously, when money could be invested in the financial markets with high interest rates, the absence of a tax payment would have been accompanied by the potential loss of the opportunity to take interest. This applies both to the Treasury and to taxpayers who could expect a tax refund. Therefore, unlike many other tax benefits, interest is not compulsory.

In tax law, measures such as the penalty payment are known, which allow the tax administration to bring taxpayers to a certain behavior. Therefore, these ancillary tax benefits naturally have a compulsory character. There is a legal maximum of EUR 25,000 for periodic penalty payments. However, the amount of periodic penalty payments must be both appropriate and appropriate. They should thus restrict the taxpayer and other persons involved as little as possible without losing their effect.

However, periodic penalty payments are rare in practice. For example, periodic penalty payments are applied in situations where the financial administration has reason to believe that it has no prospect of enforcing its administrative acts without the use of coercion. So penalty payments can be considered if the tax office insists that taxpayers submit their tax return.

But finance officials must first threaten penalty payments before they are allowed to collect them. The threat is itself an administrative act. The imposition of periodic penalty payments following a threat is also an administrative act, as is the setting of their amount. However, the tax authority must also allow a reasonable period of time to fulfil the expected action of a taxpayer or to pay the penalty payment. As a rule, these administrative acts take place in writing. In fact, the financial administration can also impose several penalty payments one after the other. However, one can oppose the imposition of a penalty payment with the appeal of the objection. But it is better to bow to the will of the tax office within the granted period and take the action called for by it. However, if the period expires without result, the financial administration shall enforce the periodic penalty payments imposed.

If, however, the effect of the imposition of periodic penalty payments is absent, it is possible to effect a substitute detention by application to the district court. In any case, the substitute detention must also have been threatened beforehand. If, on the other hand, there is hardly any prospect of bringing in the penalty payments from the outset, one can consider a substitute detention and apply for it, even without having imposed prior penalty payments. According to § 334 AO, compulsive detention lasts at least one day and a maximum of two weeks.

Furthermore, additional tax benefits may be incurred in the form of delay payments. Delays are a relatively new tax benefit. The legislator introduced it only at the end of 2008 in § 146 paragraph 2b AO, because he considered in particular to enforce the obligation to cooperate in the context of an audit a suitable coercive means necessary. More important, however, is the fact that the legislature wanted to introduce a regulation in order to make the transfer of an accounting abroad (third country) subject to approval.

If a taxpayer remains uncooperative in the course of an audit or has even relocated his accounting without approval of the tax administration to a third country, he must expect a delay payment. For this purpose, the legislature gave the tax authority relatively free rein in the application of this coercive measure. Delay funds can vary between EUR 2,500 and EUR 250,000. Unlike periodic penalty payments, however, a delay payment can only be set once in order to obtain an action by a taxpayer. Again, we can object to this. And as with all negative appeal decisions of the tax administration, a challenge action is also allowed at the tax court.