Tax & Legal

Foreign companies as shareholders that are eligible for a refund of withholding tax in accordance with Art. 5 of the Parent-Subsidiary Directive are entitled to interest under EU law if the refund of the tax amounts is withheld from them in violation of EU law or if - for the same reason - tax is withheld from the outset. This was decided by the Supreme Tax Court in a recent judgment.

In a most recent decision in relation to a request to suspend a tax payment, the Supreme Tax Court confirmed the constitutionality of the rate of the late- payment penalties because of the rise in interest rates that began with the start of the war in Ukraine. According to the Court, at least since March 2022, there are no longer any serious doubts about the constitutionality of the statutory regulation on the amount of late-payment surcharges.

The Ministry of Finance has issued a new version on the Guidance to the Application of General Tax Code in relation to Section 233a (interest on overdue tax/tax refunds) vis-à-vis the implementation of the legal amendments in the Second Act to Amend the General Tax Code and the Introductory Act to the General Tax Code

On Thursday, 23 June 2022, the Bundestag resolved to reduce the interest rate for interest on tax arrears and tax refunds. The resolution was based on the recommendation of the Finance Committee.

The ECJ has held that a repayment claim for a tax levied in breach of community law should bear interest for the entire period between payment and repayment.

The Supreme Tax Court has held that the interest paid to a corporation on an overpayment of corporation tax is taxable income in contrast to the position of income tax payers up to 2010.