Tax & Legal

Tax & Legal

Statutory interest rate levied on late payment or refund of taxes unconstitutional

In a decision on two joint cases published today the Constitutional Court decided that interest incurred on late payment of taxes (back taxes) and the interest paid for tax refunds pursuant to Sections 233a and 238(1) sentence 1 of the German Fiscal Code is not in line with the German Constitution insofar as the interest rate is set at 0.5% per month and for interest periods from 1 January 2014. Continue reading

Successful constitutional complaint against income correction affecting freedom of establishment

The German Constitutional Court overturned a 2019 judgment of the Supreme Tax Court regarding the erstwhile change in its case law on the issue of the income correction with respect to an unsecured group loan because the tax court failed to submit the facts of the case to the European Court of Justice (ECJ) for final clarification and thus violated the complainant’s right to the lawful judge under Article 101(1) of the Constitutional Statute. Continue reading

Constitutional complaint regarding the trade tax treatment of gains from the disposal of partnership interests unsuccessful

In a decision on 10 April 2018, the German Constitutional Court concluded that the complaint that the trade tax treatment of gains from the disposal of partnership interests was unconstitutional because it contravened the principle of equality was not justified. Continue reading

Standard actuarial interest rate for pension provisions of 6 %: unconstitutional?

The Cologne Tax Court considers the standard actuarial interest rate of 6 % applied for the calculation of pension provisions under Section 6a of the Income Tax Act in 2015 to be unconstitutional. It has suspended the appeal and referred the matter to the Constitutional Court for that Court to consider the constitutionality of the standard rate.

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Referral to Federal Constitutional Court: trade tax on the profits arising on the disposal of an interest in a partnership by persons other than individuals.

The First Senate of the Federal Constitutional Court heard arguments on the constitutionality of a provision in the Trade Tax Act, according to which trade tax was levied on the sale of business interests. The case has opened up a question of principle with regard to trade tax. Continue reading