May 31, 2018 /
The Federal Fiscal Court ultimately had to deal with the high interest rate of six percent on tax arrears for interest periods from 2015 onwards. The judges were presented with a case in which a married couple had to pay interest of EUR 240,831 on an additional tax payment of EUR 1,984,800 for the period from April 1, 2015 to November 16, 2017.
The applicants demanded the suspension of the enforcement of the interest notice, arguing that the interest rate of 0.5 percent per month, i.e. 6% p.a., was unconstitutional.
Federal Fiscal Court upholds complaint
The BFH ruled in favor of the petitioners and suspended the enforcement of the interest assessment notice in full on the grounds that the assessment of the interest rate was unrealistic and violated the general principle of equality. During the period in dispute, a low market interest rate level had become structurally and sustainably entrenched, meaning that the statutory interest rate far exceeded the appropriate framework of economic reality.
According to the BFH, modern data processing technology no longer stands in the way of adjusting the amount of interest, which has remained unchanged since 1961, to the respective market interest rate or to the base interest rate within the meaning of Section 247 BGB.
Furthermore, in the opinion of the BFH, there are significant constitutional doubts as to whether the interest rate complies with the prohibition of excessiveness resulting from the rule of law principle of Art. 20 para. 3 GG. In times of structurally low interest rates, this level of interest would have the effect of a gratuitous surcharge on the tax assessment.