Last Updated on May 31, 2021 by LawEuro
The Fiscal Code of Germany
Second Chapter
Interest accrual, late-payment penalties
1st Subchapter
Interest accrual
Section 233
General
Interest shall be charged on claims arising from the tax debtor-creditor relationship (section 37) only to the extent that this is legally prescribed. Interest shall not be charged on claims to ancillary tax payments (section 3(4)) and the corresponding refund claims.
Section 233a
Interest accrual on tax deficiencies and tax refunds
(1) Where the assessment of income tax, corporation tax, capital tax, VAT or trade tax leads to a differential within the meaning of subsection (3) below, interest shall be charged on this differential. This shall not apply to the assessment of prepayments and withheld taxes.
(2) The period of interest accrual shall begin 15 months after expiration of the calendar year in which the tax has arisen. With respect to income tax and corporation tax, it shall begin 23 months after this date where the income from agricultural and forestry undertakings is more than other income when the tax is first assessed. It shall end on expiration of the date when the tax assessment comes into effect.
(2a) Notwithstanding subsection (2), first and second sentences, above, where the tax assessment is based on an event with retroactive effect (section 175(1), first sentence, number 2 and section 175(2)) or a loss deduction pursuant to section 10d(1) of the Income Tax Act, the period of interest accrual shall begin 15 months after expiration of the calendar year in which the event with retroactive effect occurred or the loss was incurred.
(3) The assessed tax minus the withheld taxes to be credited, the corporation tax to be credited and the prepayments assessed up to the beginning of the period of interest accrual (differential) shall form the basis for calculating the interest. With respect to capital tax, the assessed tax minus the assessed prepayments or the annual tax assessed to date shall form the basis of the differential for calculating the interest. Interest shall be charged on a differential in the taxpayer’s favour only up to an amount equal to the amount to be refunded; interest shall begin to accrue at the earliest on the date of payment.
(4) The assessment of interest should be issued in conjunction with the tax assessment.
(5) Where the tax assessment is cancelled, amended or corrected pursuant to section 129, any previous assessment of interest shall be amended; the same shall apply where the crediting of tax amounts is withdrawn, revoked or corrected pursuant to section 129. The differential between the assessed tax and the previously assessed tax, both reduced by the amounts of withheld tax and corporation tax to be credited, shall form the basis for calculating interest. The resulting interest amount shall be supplemented by the assessable interest up to this point; where the differential is in the taxpayer’s favour, assessed interest shall be added to this amount. In other respects, subsection (3), third sentence, above shall apply accordingly.
(6) Subsections (1) to (5) above shall apply accordingly to the annual adjustment of wages tax.
(7) In applying subsection (2a) above, subsections (3) and (5) above shall apply under the proviso that the differential is to be divided into sub-differentials, each sub-differential being comprised of sub-amounts with the same starting date for the accrual of interest; interest shall be calculated for each sub-differential separately and in the chronological order of the sub-differentials, beginning with the interest on the sub-differential with the earliest commencement date of interest accrual. Where a sub-differential in the taxpayer’s favour results, assessed interest shall be charged on this amount at the earliest from the beginning of the decisive period of interest accrual for this sub-differential; interest for the period up to the beginning of this sub-differential’s period of interest accrual shall remain permanently. This shall also apply where, previously within the same interest calculation, interest had been calculated on a sub-differential in the taxpayer’s favour.
Section 234
Interest during deferment
(1) Interest shall be levied for the period for which a deferment of claims arising from the tax debtor-creditor relationship is granted. Where upon expiration of the deferment the tax assessment notice is cancelled, amended or corrected pursuant to section 129, the interest accrued up to this time shall remain unaffected.
(2) Interest may be waived in full or in part where its collection would be unreasonable in individual cases.
(3) Interest amounts pursuant to section 233a which have been assessed for the same period shall be credited.
Section 235
Interest accrual on evaded taxes
(1) Interest shall be charged on evaded taxes. The debtor of the interest shall be the person to whose advantage the taxes have been evaded. Where tax evasion is committed by a person other than the tax debtor failing to fulfil his obligation to remit withheld taxes to the revenue authority or to pay taxes imposed on another, this person shall be the debtor of the interest.
(2) The period of interest accrual shall begin upon occurrence of the understating of the taxes or attainment of the tax advantage unless the evaded amounts would have fallen due at a later date had the taxes not been evaded. In this case, the later point in time shall be decisive.
(3) The period of accrual of interest shall end upon payment of the evaded taxes. Interest pursuant to this provision shall not be levied in a period to which a late-payment penalty applies or for which the payment is deferred or implementation suspended. Where upon conclusion of the period of interest accrual the tax assessment notice is cancelled, amended or corrected pursuant to section 129, the interest accrued up to this time shall remain unaffected.
(4) Interest amounts pursuant to section 233a which have been assessed for the same period shall be credited.
Section 236
Interest on refund amounts during legal proceedings
(1) Subject to the provisions of subsection (3) below, where an assessed tax is reduced or a tax rebate granted by final and binding judicial ruling or as a result of such a ruling, interest shall accrue on the amount to be refunded or rebated from the date proceedings commence to the date of payment. Where the amount to be refunded is not paid until after legal proceedings have commenced, interest shall begin to accrue from the date of payment.
(2) Subsection (1) above shall apply accordingly where
1. the legal dispute is settled by cancellation of or amendment to the administrative act being disputed or by issue of the administrative act being requested, or
2. a final and binding judicial ruling or an incontestable administrative act through which the dispute is settled leads
a) to the reduction of the tax assessed in a follow-up notice,
b) to the reduction of trade tax following amendment to the base amount of trade tax.
(3) Interest shall not be charged on an amount to be refunded or rebated where the participant has been ordered to pay the costs of legal remedy pursuant to section 137, first sentence, of the Code of Procedure for Fiscal Courts.
(4) Interest amounts pursuant to section 233a which have been assessed for the same period shall be credited.
(5) A notice of interest amounts shall not be cancelled or amended when the tax assessment notice is cancelled, amended or corrected pursuant to section 129 following conclusion of the legal remedy proceedings.
Section 237
Interest while implementation is suspended
(1) Where an objection or an action for rescission against a tax assessment notice, a self-assessed tax return or an administrative act which cancels or amends a tax rebate notice, or against an objection ruling on one of these administrative acts, has not led to the desired result and can no longer be appealed, interest shall be charged on the owed amount with respect to which implementation of the disputed administrative act was suspended. The first sentence above shall apply accordingly where implementation of a follow-up notice has been suspended following the submission of a formal out-of-court or court appeal against a basic assessment notice (section 171(10)) or an appeals ruling on a basic assessment notice.
(2) Interest shall be levied from the date when the authority whose administrative act is being challenged receives the out-of-court appeal or from the date when judicial proceedings commence to the date when the suspension of implementation ends. Where implementation is not suspended until after the out-of-court appeal has been received or the proceedings have commenced, interest shall be charged from the date when the suspension of implementation takes effect.
(3) Subsections (1) and (2) above shall apply accordingly where implementation of a notice specifying the base amount of trade tax or a trade tax assessment notice is suspended following suspension of the implementation of an income tax assessment notice, a corporation tax assessment notice or a notice of determination.
(4) Section 234(2) and (3) shall apply accordingly.
(5) A notice of interest amounts shall not be cancelled or amended when the tax assessment notice is cancelled, amended or corrected pursuant to section 129 following conclusion of the legal remedy proceedings.
Section 238
Amount and calculation of interest
(1) The interest shall be one half percent for every month. It shall be payable only for full months from the date of commencement of the accrual period; uncompleted months shall not be included. Where the claim on which interest is chargeable is settled by set-off, the date on which the debt of the person seeking set-off becomes due shall be deemed to be the date of payment.
(2) In calculating interest, the amount on which interest is chargeable shall be rounded down for every type of tax to the next figure divisible by 50 euros.
Section 239
Interest assessment
(1) The provisions applicable to taxes shall apply accordingly to interest, but the period for assessment shall consist of one year. The period for assessment shall begin:
1. in the cases described in section 233a, at the end of the calendar year in which the tax was assessed, cancelled, amended or corrected pursuant to section 129,
2. in the cases described in section 234, at the end of the calendar year in which the deferment has ended,
3. in the cases described in section 235, at the end of the calendar year in which the assessment of the evaded taxes has become final and binding, but not before the end of the calendar year in which criminal proceedings initiated have been closed and can no longer be appealed,
4. in the cases described in section 236, at the end of the calendar year in which the tax has been refunded or the tax rebate paid out,
5. in the cases described in section 237, at the end of the calendar year in which an objection or action for rescission has not led to the desired result and can no longer be appealed.
The period for assessment for the cases described in section 233a shall not expire for as long as the tax assessment, its cancellation, its amendment or its correction pursuant to section 129 is still permissible.
(2) Interest shall be rounded to the full euro in the taxpayer’s favour. It shall be assessed only where it amounts to at least 10 euros.
(3) If tax bases are determined separately or if a base amount for a non-personal tax is assessed, the bases for assessing interest
1. under section 233a in cases where section 233a(2a) applies or
2. under section 235
are to be determined separately to the extent that they relate to matters that are the subject of the basic assessment notice.
(4) If interest in accordance with section 233a is assessed on a self-assessed tax return – which is deemed equivalent to a tax assessment subject to review under the first sentence of section 168 – such interest assessment shall likewise be subject to review.
2nd Subchapter
Late-payment penalties
Section 240
Late-payment penalties
(1) Where a tax is not paid by the end of the due date, a late-payment penalty of 1 percent of the rounded tax amount in arrears shall be payable for each month of default; the amount shall be rounded down to the nearest amount divisible by 50 euros. The same shall apply to repayable tax rebates and debts from liability to the extent that the liability extends to taxes and repayable tax rebates. Default pursuant to the first sentence above shall not be deemed to have occurred before the tax has been assessed or declared. Where the assessment of a tax or tax rebate is cancelled, amended or corrected pursuant to section 129, the late-payment penalties effected up to this point shall remain unaffected; the same shall apply where a notice of liability is withdrawn, revoked or corrected pursuant to section 129. Where the claim is settled by set-off, the late-payment penalties which have accrued up to the due date of the debt of the person seeking set-off shall remain unaffected.
(2) Late-payment penalties shall not arise with regard to ancillary tax payments.
(3) No late-payment penalty shall be levied for defaults of up to three days. This shall not apply to payments pursuant to section 224(2) number 1.
(4) In cases of joint and several debt, late-payment penalties shall arise with respect to each joint and several debtor in default. However, the total value of the late-payment penalties to be paid shall not be higher than that had the default occurred on the part of one joint and several debtor only.
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