The tax code distinguishes between the correction of tax rulings or equivalent rulings and the cancellation of other administrative acts. In the case of the latter, a distinction must be made between the revocation of a lawful administrative act (§ 131 AO) and the revocation of an unlawful administrative act (§ 130 AO). In this article, we explain under which conditions an administrative act can be revoked and when such a revocation need exists at all.

Correction of administrative acts in tax law

1.1. Overcoming the durability of the administrative act

The taxation procedure is a mass procedure. In the interests of legality and equality of taxation, corrections are therefore necessary with regard to administrative acts. If the order period has expired, administrative acts become in force. However, this does not mean that the administrative act is also valid. Despite the durability, the Authority may cancel the administrative act. The tax code gives different possibilities for this. What they all have in common, however, is the need to balance the principles of legal certainty and protection of legitimate expectations with legality.

1.2. Correction system of the Tax Code

The correction system of the tax code is dualistically divided. It is to differentiate between §§ 130, 131 AO and §§ 165, 172 ff. Sections 130 to 132 AO do not regulate the possibility of withdrawal and revocation conclusively. Special rules apply with §§ 164 paragraph 2, 165 paragraph 2, 172-177 AO for tax rulings and for those rulings for which the rules on tax rulings apply accordingly. In addition, there is no room for the application of §§ 130 ff. However, § 131 AO applies, inter alia, for the rejection of favourable administrative acts, for independent orders in taxation proceedings including external examination, for the request for bookkeeping, for the fixing of delay surcharges or for liability decisions and toleration decisions.

§ 131 AO lays down different rules for revocation for legitimate beneficiaries (§ 131 paragraph 2 AO) and for non-beneficial ones (§ 131 paragraph 1 AO). A non-favourable administrative act which is lawful at the time of issuance may be revoked (§ 131 (1) AO). On the other hand, a lawful favourable administrative act can only be revoked in rare exceptional cases on the grounds of legitimate expectations (§ 131 (2) AO).

1.3. Legal administrative act

According to its wording, § 131 AO covers only lawful administrative acts. An administrative act is lawful if it is made under the law and does not violate any substantive or formal law. In the case of discretionary management files, this also includes that they comply with the legal limits of discretion and comply with the purpose of the discretionary power. The legality of the administrative act shall depend on the circumstances at the time of the adoption of the administrative act. If the administrative act later becomes unlawful, a revocation according to § 131 AO may be possible. Its scope for examining a discretionary decision shall be based on the date of the last administrative decision.

In addition to the wording of § 131 paragraph 2 no. 1 AO, the standard is also applicable to unlawful administrative acts. What applies to legitimate administrative acts must even more apply to illegal administrative acts. Furthermore, § 131 also applies to administrative acts that have been reinterpreted into lawful ones (§ 128 AO).

1.4. Need for withdrawal

If the administrative act is lawful, the question arises as to when there might be a need to revoke the administrative act. However, the need for revocation may arise due to a changed legal situation and/or factual situation. The change in the legal situation can only have an effect if it has been retroactively put into effect. Otherwise, it is only relevant for permanent administrative files. The change of circumstances, on the other hand, affects only permanent administrative acts

In the case of discretionary acts which are legal, a need for revocation may arise from the fact that the tax authority assumes that it can better meet the discretionary purpose by withdrawing the administrative act. In addition, the change in the factual and legal situation can also affect discretionary administrative acts.

2. revocation of lawful non-favourable administrative acts

2.1. In principle, possibility of revocation

The revocation of non-favourable administrative acts is regulated in § 131 (1) AO. Therefore, they can in principle be revoked. In any case, however, this only applies with effect for the future.

§ 131 (1) AO does not speak of burdensome, but of non-favourable administrative acts. Therefore, not only those administrative acts are covered, which impose a deed, toleration or omission or a monetary benefit on the person concerned. Rather, those who reject a claimed claim or make a negative decision are also included. However, with regard to the latter decisions concerning a tax assessment, § 172 paragraph 2 AO applies, so that the correction provisions apply to tax assessments. Consequently, § 131 AO does not apply.

2.2. Exclusion of revocation

In § 131 paragraph 1 AO, however, exclusion grounds are also standardized. There is no possibility of revocation if an administrative act of the same content would have to be adopted again. This is always the case if the same measure would have to be taken again ex officio by law. This also applies where there is a legal right to adopt the administrative act or where, in the case of discretionary decisions, the margin of discretion is reduced to zero.

Furthermore, owing solely to procedural errors and formal errors, no annulment can be demanded if no other decision has to be made in the substance. Furthermore, a revocation may be inadmissible for other reasons. This applies, for example, if the authority is bound by instructions.

3. revocation of legally beneficial administrative acts

3.1. In principle, no admissibility of revocation

The revocation option for favourable administrative acts is regulated in § 131 paragraph 2 AO. For them, the principle of trust largely limits the possibility of revocation. Only in a few exceptional cases, in which no trust has been invested or it could no longer be invested, can the administrative act be revoked. Furthermore, the public interest may also demand the revocation. These exceptional cases are regulated in § 131 paragraph 2 AO. That list is final.

3.2 Exception: Presence of a reason for withdrawal

3.2.1. Withdrawal reservation

The administrative act may be revoked if the revocation is permitted by law or which was reserved for revocation in the administrative act (§ 131 paragraph 2 no. 1 AO). In the case of reservation of cancellation, there is no need for protection of legitimate expectations, because the beneficiary must expect the cancellation due to the reservation.

However, the condition is that the reservation of revocation is permissible. It may in principle be attached only in the case of discretionary acts. The reservation of the review of the tax assessment cannot be reinterpreted as a reservation of withdrawal according to § 163 AO.

If the revocation has been permitted by law or reserved in the administrative act, the authority must consider in individual cases whether it wants to make use of its revocation power. The exercise of the reservation of revocation is exercise of discretion. It must be error-free and comply with the purpose of the authorisation. The conditions at the time of revocation are decisive.

3.2.2. Conditions reserved

The beneficiary administrative act may be revoked in accordance with § 131 paragraph 2 no. 2 AO if it was permissibly linked to a condition and the beneficiary did not fulfill the condition or did not fulfill it within a period specified to him. The revocation based on an unlawful condition is discretionary. However, it is in the legitimate interest of the Authority to comply with a lawful condition. If the beneficiary does not meet a permissible obligation and thus legitimate expectations of behaviour, he does not deserve protection of legitimate expectations. The revocation is based solely on his own behavior.

However, the reasons for non-compliance are also irrelevant, so that no fault on the part of the beneficiary is necessary. However, before exercising the revocation, the tax authority must first check whether the condition was attempted to enforce by coercive means. However, compulsory enforcement does not necessarily have to precede the revocation of the administrative act. It should be noted that the compulsory procedure is cumbersome and costly. In principle, the protection of the general public against such burdens is to be assessed higher than the protection of a non-compliant taxable person. However, the circumstances of the individual case and the behaviour of the taxpayer are also relevant.

If, on the other hand, a suspensive condition does not occur, the advantage does not take effect. If a dissolving condition occurs, the administrative act shall become invalid without revocation being necessary. At the expiry of the time limit, the effects of the administrative act for the future are eliminated by the expiry of time.

3.2.3. Subsequent fact

Furthermore, the revocation of a favourable administrative act is permissible if, on the basis of ex post facts, the authority would be entitled not to adopt the administrative act and if without the revocation the public interest would be jeopardised. The threat to the public interest is necessary because the subsequent occurrence of facts is usually not due to the behaviour of the beneficiary and cannot be foreseen by him. The public interest must be of such weight that the protection of legitimate expectations under the circumstances of the case is significantly withdrawn. Minor effects do not jeopardise the public interest.

Fact is any life process which, in whole or in part, satisfies the statutory tax event or a single characteristic of this event. These life processes are states and processes of the world of being, the properties of the objects of this world of being and the mutual relations between these objects. However, it is not a matter of facts if the legal situation subsequently changes or if the legal situation is subsequently assessed differently by courts or authorities. On the other hand, it is a fact if the tax assessment of a situation changes in another decision and this has binding effect for the one to be revoked.

Furthermore, the condition is that the facts on which the beneficiary act is based are changed by ex post facts. However, it is necessary that no final decision should be taken. Such a permanent decision is, for example, the passing of an exam. The applicant may not be deprived of the powers deriving from the examination if he forgets his expertise. Facts do not occur retrospectively if the authority only subsequently becomes aware of legally relevant facts that existed before the VA was issued or only subsequently recognizes their legal relevance. The same applies if it subsequently assesses the unchanged situation differently.

4th scope of revocation

4.1 Objective scope

The extent to which the administrative act can be revoked depends on the extent to which the reasons for revocation extend. Depending on this, an entire revocation or a partial revocation comes into consideration. A partial revocation exists in the case of a change restricting the content.

Even if the reason for withdrawal covers only part of the administrative act, it can be revoked in its entirety. This applies if the part affected by the reason for withdrawal is so essential that the tax authority would not have adopted the entire administrative act if the reason for withdrawal had been known.

4.2. Temporal scope

Only one revocation with effect for the future is possible. Therefore, the revocation can only affect permanent administrative acts. The revoked administrative act shall become invalid upon the revocation taking effect. However, at its discretion, the tax authority can also determine a later date (§ 131 paragraph 3 AO).

5th withdrawal period

Insofar as a determination period applies, administrative acts may not be revoked or amended after expiry of the determination period (§ 169 (1) AO). For beneficial administrative acts according to §§ 131 paragraph 2 in conjunction with § 130 paragraph 3 AO, a special regulation must be observed. Accordingly, the withdrawal is only possible within one year after having knowledge of the facts justifying the withdrawal. However, this does not apply in the event that the administrative act was obtained by unfair means.

6th appeal

The original administrative act takes effect again when the revocation is revoked in the appeal procedure or by the authority. An appeal may be lodged against the revocation of an administrative act. He is also allowed against the rejection of the revocation.