An unlawful administrative act can be reinterpreted into an error-free administrative act according to § 128 AO. The reinterpretation is regulated in § 128 AO and is subject to certain conditions. These and the legal consequences of a reinterpretation are explained in this article.

reinterpretation as process facilitation

There are cases where an administrative act, despite its illegality, does not have to be annulled by the authority or by the appeal procedure. These cases are regulated in § 126 AO (medical regulations), § 127 AO (violation of procedural regulations and formal regulations) and § 128 AO (reinterpretation). The cumbersome procedure for annulment is obsolete in these cases. It is not necessary to withdraw the administrative act and subsequently adopt a new administrative act in order to achieve the same objective in a new procedure.

Rather, it is enough to reinterpret the administrative act. However, this reinterpretation is subject to strict conditions. It shall be inadmissible if the defective administrative act is not likely to be withdrawn. Therefore, the conditions for withdrawal (§ 130 AO) must be met with regard to the original administrative act. In addition, according to § 128 (1) AO, it is necessary that the error-free administrative act formed by reinterpretation could have been lawfully adopted in the procedure and in the corresponding form. Furthermore, § 128 (4) AO ensures that the right to hearing of the person concerned is not shortened.

Not only the financial authority, but also the financial court is empowered to reinterpret. This even applies to the Bundesfinanzhof. For this, however, the actual findings binding the Bundesfinanzhof must be sufficient. Furthermore, the parties concerned must have been given sufficient legal hearing and their legal defence must not be affected.

2. prerequisites for reinterpretation

2.1. Incorrect administrative act

An unlawful administrative act may be reinterpreted into another lawful administrative act. The law speaks in this respect of erroneous administrative acts. Incorrect in this sense are null and unlawful administrative acts. However, it is not possible, for example, to reinterpret an erroneous notification of the administrative act into an effective one, because the notification itself is not an administrative act.

2.2. New administrative act aimed at the same goal

The new, error-free administrative act must be aimed at the same goal as the faulty administrative act. This formulation is relatively vague, so the question arises as to what is meant by “same goal”.

With each administrative act, the authority pursues a specific intention. It wants to achieve legal success. This goal must then also be achieved through the new, error-free administrative act. The objectives of an administrative act may be burdensome or favourable. The comparison with § 128 (2) sentence 1 AO shows that it is also possible to modify the legal consequences of the administrative act, since a reinterpretation can therefore result in a more favourable legal consequence. It would be conceivable, for example, to reduce a delay surcharge. In addition, the Oberverwaltungsgericht NRW has converted a road construction fee into a ground exploitation fee.

It would not be possible to refer a tax assessment or similar assessment to another calendar year if a different situation had to be applied. The Authority therefore does not pursue the same objective if the new administrative act would have to be directed against another person. This would rather be seen as a change of circumstances. The reinterpretation of a burdensome administrative act into a favourable administrative act also does not pursue the same objective. In addition, the authority cannot re-interpret a liability assessment into a tax assessment. It is another goal to call someone liable than to call him a debtor.

2.3. New administrative act

Re-interpretation must result in another new administrative act. Therefore, the reinterpretation must be distinguished from the interpretation of the administrative act and from the addition of reasons for an administrative act. If an administrative act is not justified or is wrongly justified, then reinterpretation shall not be considered. In the event of incorrect justification or incorrect or lack of legal basis, the administrative act is ultimately correct. It therefore does not need to be replaced by another administrative act. The tax court must also examine all possible legal bases and may not annul the administrative act on the grounds of an incorrect legal base if the administrative act can be justified otherwise.

2.4. Exclusion of reinterpretation

§ 128 paragraph 2 AO standardizes reasons that exclude the reinterpretation. The legal consequences of the error-free administrative act shall not be less favourable than those of the error-free administrative act. Therefore, a burden must not be increased and a favourable treatment must not be cancelled, reduced or restricted.

Furthermore, the reinterpretation is inadmissible if the defective administrative act should not be withdrawn.

If the original administrative act concerned a discretionary decision, no reinterpretation into a bound decision is possible. Indeed, discretionary powers presuppose that the Authority was aware of its discretion and exercised its discretion. An exception only applies if the discretion is reduced to zero. However, discretionary decisions can in turn be interpreted as binding decisions.

2.5 Duty to be consulted

The procedure that led to the faulty administrative act is not repeated, but is based on the faultless administrative act. However, where the error-free administrative act is based on facts on which the person concerned has not previously been able to comment, the hearing shall be held. Otherwise, however, the principle of non-requirement of repetition of the procedure remains.

Legal protection in the event of reinterpretation

The reinterpretation is permitted until the expiry of an existing limitation period. The first defective administrative act shall be maintained only as another administrative act with other equivalent rules and legal consequences. If the tax authority carries out the reinterpretation, however, the reinterpretation decision still contains an administrative act. This shall be communicated to the person concerned. This ensures that the person concerned can assert by means of an appeal that the conditions for re-interpretation did not exist. The rejection of the reinterpretation can also be contested.