Anyone who submits their income tax return significantly late must expect to be charged a late filing penalty. Even a natural disaster does not alter this, as the Cologne Finance Court has clarified in a recent judgement (judgement of 22 April 2026, ref. 12 K 72/25).
What had happened?
In 2020, an employee had received short-time working allowance in addition to their regular salary. By law, such income replacement benefits require the submission of an income tax return. The deadline for this had been extended due to the coronavirus pandemic and expired on 31 August 2022. However, the taxpayer did not submit their return until 30 April 2024 – a full 20 months after the deadline had passed and around 40 months after the end of the 2020 tax year.
The tax office subsequently imposed a late filing penalty of 500 euros. The taxpayer challenged this decision in court, putting forward two arguments: firstly, he had not been aware that he was required to file a tax return. Secondly, his tax adviser had been under considerable strain due to the flood disaster in the Ahr Valley.
The court did not allow any exceptions
The Cologne Fiscal Court dismissed the claim. Under the law (Section 152(2)(1) of the German Fiscal Code), a late filing penalty must be imposed if an annual tax return is submitted more than 14 months after the end of the calendar year. In this case, the delay amounted to 40 months. The option to provide a valid reason for the delay, which would otherwise apply, is expressly excluded where the deadline is exceeded to this extent.
Nor did the reference to the flood disaster help the claimant. The court found that there was a lack of specific details as to how and for how long the tax adviser had actually been affected. Furthermore, the flood disaster took place in July 2021, whilst the deadline for filing the tax return did not expire until over a year later. It is also a matter of course for a tax adviser to be aware of the obligation to declare wage replacement benefits.
No relief under the equity rule
The law provides for leniency where a person is required by the tax office to submit a tax return for the first time and, up until that point, had reasonable grounds to believe that they were not required to do so. The court also ruled out this possibility. Anyone receiving tax advice must be able to rely on qualified advice. In this context, no unavoidable mistake regarding the obligation to file a tax return is apparent.
Surcharge higher than the tax liability
The surcharge is calculated at 25 euros per month or part thereof of delay. For 20 months, this amounts to exactly the stipulated 500 euros. It is worth noting that this surcharge exceeded the actual back tax due. The Cologne Fiscal Court did not regard this as a breach of the Constitution: the state has a legitimate interest in ensuring that tax returns are submitted on time, regardless of the amount of tax assessed.
As there has as yet been no case law from the highest court regarding the interpretation of the equity provision, the court has granted leave to appeal. A final ruling by the Federal Fiscal Court is therefore possible.
What does this mean for taxpayers?
The judgement demonstrates how consistently the courts apply the provisions on late payment surcharges in the German Fiscal Code. Anyone who has received wage replacement benefits such as short-time working allowance, parental allowance or sick pay should definitely check whether this has given rise to an obligation to file a tax return. If in any doubt, it is advisable to seek tax advice at an early stage.
Source: Haufe: Tax
This post and the accompanying image were created with the help of AI and have been editorially reviewed.
