Now more there is the new application decree for the AStG. Its final version justifies some changes in the context of the exit taxation for natural persons. We clarify which changes result from this.

1st Final Application Decree for the AStG of 21.12.2023

The application decree for the AStG (AEAStG) of 21.12.2023 replaces the application decree of 2004. On 19 July 2023, the Federal Ministry of Finance (BMF) published the draft of the new version. Until 04.09.2023 there was the possibility of comment. As a result of the comments, the draft was again amended and the subsequent publication. We explain the innovations.

2nd return scheme

2.1. Provision of return intention in the application decree to the AStG

In the application decree on the AStG, a supplement to the requirements for the intention of return within the framework of the so-called returnee regulation (§ 6 paragraph 2 AStG) has now been made. In this way, the BMF wants to clarify which practical requirements the financial administration places on the intention of return.

The BMF has joined the jurisdiction of the Bundesfinanzhof (BFH). Accordingly, the criterion of only temporary absence is also fulfilled if the taxpayer actually returns within the specified seven-year period of § 6 (3) sentence 1 AStG. As a result of the margin line 129 of the application decree on the AStG, any discussion about the interim existence of a return intention on timely return within seven years is eliminated. This applies, for example, to so-called accidental removals. The taxpayer does not worry about his return and has unconsciously triggered the exit taxation. Then the exit tax is eliminated if he actually returns to Germany within seven years. Furthermore, the other conditions of § 6 (3) sentence 1 no. 1 to 3 AStG must be fulfilled.

2.2. Deferral request

The taxpayer may submit an application for deferral of the exit tax during the temporary absence (§ 6 (4) sentence 7 AStG) or at a later date apply for the extension of the return period by up to a further five years (§ 6 (3) AStG). The extension of the return period shall be conditional on the continued intention to return. It was already provided in the draft of the new application decree that the mere intention to return and a sufficient probability of occurrence are sufficient. However, it was not clear how the intention of return should be explained. The second sentence of paragraph 128 of the application decree now provides that the taxable person’s declaration is sufficient to accept the intention to return if there are no indications to the contrary. The BMF thus clearly reduces the hurdles for the acceptance of a return intention.

However, it remains open which clues may suggest an opposite rating. In any case, the task of any residence will not suffice. Rather, it is a typical side effect of a departure. The management of a secondary residence is usually not desired for cost reasons. However, statements by the taxpayer aimed at his final departure are suitable to the tax office or in publicly available sources.

3 Transmission of death due to temporary absence

3.1. Principle: No retroactive cancellation of the Exit tax for transfers

In principle, a retroactive waiver of the Exit Tax is no longer possible if Exit Tax relevant shares are transferred during the temporary absence of the taxpayer within the meaning of § 6 (3) AStG. If installment payment or deferral has been granted, the exit tax is due within one month and, if applicable, interest is paid subsequently.

3.2. Exception: Transfer without charge/inheritance

It is only harmless if the shares in question are transferred to another natural person free of charge or due to death. Then the legal successor himself can either return in time within the seven-year period or apply for an extension of the First by up to five years in person (points 140, 141 AEAStG).

3.3 Requirement for notification of the acquisition after the application decree for the AStG

However, at the request of the legal predecessor, the return period may have been extended beyond the date of death by the tax office before the transfer of death. If the legal successor is not subject to unlimited taxation within the meaning of § 1 (1) EStG at the time of the succession, he must immediately declare his own intention to return to the tax office (paragraph 142, first sentence of the AEAStG).

Otherwise the return scheme should no longer be used. Any deferral granted should be omitted. Immediately means without guilty hesitation. However, it should be borne in mind that, according to the reality of life, inheritance certainly does not first think of a communication of its intention to return, which has not been relevant to it until now. It is unclear, however, which of the duties of cooperation is meant. The inheritance is covered by both occasion-related obligations to cooperate within the meaning of § 6 (5) sentence 1 AStG) and the annual event-independent obligation to cooperate in § 6 (5) sentence 3 AStG, both of which are provided with different deadlines. If the succession occurs, for example, at the end of June or the beginning of July of a year, the heir has only one month for both duties of cooperation.

By linking to these duties of cooperation, cases of delayed knowledge or rejection of the inheritance cannot be properly recorded. If the heir shows the succession without culpable hesitation, but not within one month to the tax office according to § 6 (5) sentence 1 and 2 AStG or he misses the timely submission of the non-indicative notification within the meaning of § 6 (5) sentence 3 AStG until 31.07., a previously deferred exit tax would be due within one month.

This could have been avoided by no longer linking the obligations to cooperate in paragraph 142 sentence 1 and paragraph 183 sentence 1 of the application decree to the AStG. It would make sense to ask for a declaration of intention to return made by the heir without guilty hesitation.

4. Necessity of a security in case of instalment and deferral

The deferral of the tax according to § 6 (4) sentence 1, paragraph 7 AStG in the case of temporary absence is in principle only granted against security. In practice, the guarantee has so far been consistently required, but cannot regularly be provided by the taxpayer. The reason for this is that the security is not accepted and other guarantees are often not available.

Also in the draft of the new application decree there were no concrete regulations on the safety performance. Rather, he referred to §§ 241 ff. However, these rules only specify the type of collateral to be provided. However, no information is given on the circumstances that lead to the tax office requesting a security.

In the final version, however, it has now been added in point 171 AEStG which circumstances must be taken into account. The guarantee should therefore be required if the future limited accessibility of the German Treasury justifies a greater threat to the tax claim than in domestic cases. The examination shall take into account the total assets of the taxable person, the likelihood of return, the family relationship and the link with the country and the possibilities of enforcement in the assets of the taxable person at home and abroad. It is also important whether the taxpayer has always fulfilled his tax obligations in the past in full and on time. It must also be taken into account whether the taxable person demonstrates credibly that he can pay the tax liability in due time at the time of payment. However, these circumstances are not conclusive in nature.

This is an individual case examination based on the individual risk of endangering the tax claim. Within the framework of the EU Administrative Assistance and Recovery Directive, the need for additional security by a guarantee is limited under European law to narrow exceptional cases.

5. Unregulated problems due to application decree on the AStG

However, some problems remain unregulated. This includes, for example, whether a departure within the meaning of § 6 (1) sentence 1 AStG can lead to a blocking period violation in other tax law areas, such as § 22 (1) UmwStG. Furthermore, the return regime is still blocked in the case of a staged return in accordance with point 156 AEAStG.