(Order of the German Federal Tax Court dated 25 April 2018, IX B 21/18)

In Germany, the interest assessments on outstanding tax amounts are extremely high (6% per year). The German Federal Tax Court has questioned the constitutionality of the law that imposes these large interest charges since it views the low level of market interest rates as structurally and sustainably consolidated. Therefore, the German Federal Tax Court has referred this topic to the German Constitutional Court. The German Constitutional Court must now decide if the interest rate has to be reduced and if yes, for which time periods.

The German Ministry of Finance has recently published an instruction to the tax authorities on this topic. This instruction determines that tax offices shall grant a suspension of execution to taxpayers which have applied for this in connection with an appeal against the assessment of interest which run as of 1 April 2015 or later.

Therefore, affected taxpayers must take action themselves and should file an appeal against interest assessments as well as an application for a suspension of execution until the German Constitutional Court has decided the pending case.