The tax office charges interest for late tax payments. These repayment interest rates account for a proud 6% per year. Such a magnitude cannot be justified in times of low interest rates for investors. This is also the view of the Bundesfinanzhof in its decision from April 2018. Taxable persons should contest their tax assessments by means of an objection.

1. So far, the tax office raised 6 percent repayment interest

The repayment interest charged by the tax office in the amount of 6% per year has not been adjusted since 1961. Now, therefore, the question arises as to what the financial administration can justify the high interest rate at all. Especially in the current times of the low-interest phase, there are no indications that justify the high interest rates of the tax office. In principle, the interest serves to compensate for the financial advantage that the taxpayer obtains by a late back payment. Due to the current low interest rate policy of the European Central Bank (ECB), the taxpayer can hardly achieve a financial advantage for himself. Therefore, the legislator would have to act here and adjust the interest rate.

2nd BFH judgment: Interest amount is unconstitutional, suspension of execution is granted

In a procedure for a married couple regarding income tax, the tax office initially set the amount at 159,139 €. After an external audit, the tax office subsequently adjusted the income tax to 2,143,939 €. For this reason, further payment interest of € 240,831 arose. After the negative decision of the tax court, the couple decide to submit the matter to the Federal Finance Court. The Bundesfinanzhof decided against the decision of the Finance Court and thus annulled its decision. The tax office is to adjust the interest and grant the suspension of the payment of the additional interest. For the decision to grant the suspension of execution, the Bundesfinanzhof did not have to submit the case to the Federal Constitutional Court. However, the judgment was made in a hurried procedure, so that the main proceedings still have to be concluded and decided whether the interest rates are actually reduced.

Submit an objection

As long as your tax assessment is not final, you can file an objection. An objection may be submitted in writing to the competent tax office. In the objection you should provide your data and the reason for the objection. You should also justify your objection in the letter. If you intend to request a suspension of execution, you should also mention this in the letter and justify the request.