Interest on suspended payments from 2014 to 2018: Münster Finance Court has serious constitutional concerns

Anyo­ne who chal­lenges a tax assess­ment and has its enforce­ment sus­pen­ded will not, in the end, have to pay any tax whilst the dis­pu­te is ongo­ing. Howe­ver, if the appeal or legal action fails, inte­rest beco­mes paya­ble retro­s­pec­tively. This so-cal­led ‘sus­pen­si­on inte­rest’ amounts to 0.5 per cent per month under the law, or 6 per cent per annum. This rate stems from the Tax Amend­ment Act of 1961 and has remain­ed vir­tual­ly unch­an­ged sin­ce then.

What the Federal Constitutional Court has already ruled

In 2021, the Fede­ral Con­sti­tu­tio­nal Court ruled that this inte­rest rate – in the case of so-cal­led ‘back-pay­ment inte­rest’, i.e. inte­rest on addi­tio­nal tax claims ari­sing from the time elap­sed until the assess­ment was made – con­tra­ve­nes the Basic Law for peri­ods from 1 Janu­ary 2014 onwards. The reason: in the ongo­ing peri­od of low inte­rest rates fol­lo­wing the 2008 finan­cial cri­sis, a rate of 6 per cent per annum is sim­ply no lon­ger in line with rea­li­ty and places a dis­pro­por­tio­na­te bur­den on taxpayers.

Howe­ver, the court ruled that the old rules should con­ti­nue to app­ly to peri­ods up to 31 Decem­ber 2018. It express­ly made no ruling regar­ding inte­rest during the sus­pen­si­on peri­od. This gap con­ti­nues to give rise to legal uncer­tain­ty to this day.

What the Münster Finance Court has now ruled

A mar­ried cou­ple had appli­ed for inte­rim reli­ef against inte­rest assess­ment noti­ces in so far as the­se included defer­ral inte­rest for the years 2014 to 2018. The Müns­ter Finan­ce Court gran­ted the appli­ca­ti­on by order of 3 June 2026 and sus­pen­ded enforce­ment of the asses­sed defer­ral inte­rest in full (Case No. 9 V 583/26).

The reaso­ning: the key con­sti­tu­tio­nal con­side­ra­ti­ons on the basis of which the Fede­ral Con­sti­tu­tio­nal Court had chal­len­ged the inte­rest on arre­ars are appli­ca­ble to the inte­rest during the sus­pen­si­on peri­od. Whe­ther the Fede­ral Con­sti­tu­tio­nal Court would also order the con­tin­ued appli­ca­ti­on of the uncon­sti­tu­tio­nal pro­vi­si­on in this case could not be pre­dic­ted in sum­ma­ry pro­cee­dings. Con­se­quent­ly, the­re were serious doubts as to its con­sti­tu­tio­na­li­ty, which, under the Tax Code, is suf­fi­ci­ent to sus­pend enforcement.

Deviation from the Federal Fiscal Court’s previous position

The Müns­ter Fis­cal Court has thus deli­bera­te­ly depar­ted from a ruling of the Fede­ral Fis­cal Court dated 24 Octo­ber 2024. The Fede­ral Fis­cal Court had not gran­ted any sus­pen­si­on for peri­ods pri­or to 2019 and had gran­ted only a limi­t­ed sus­pen­si­on for sub­se­quent peri­ods. The Müns­ter Fis­cal Court coun­ters this by arguing that, for the peri­od pri­or to 2019, the­re is no lower com­pa­ra­ti­ve rate against which only the dif­fe­rence could be clas­si­fied as doubtful. The­r­e­fo­re, it argues, a full sus­pen­si­on is warranted.

What does this mean for taxpayers?

This decis­i­on could pro­ve signi­fi­cant for indi­vi­du­als or busi­nesses that still have out­stan­ding inte­rest on defer­red pay­ments from 2014 to 2018, or who have recei­ved the rele­vant inte­rest assess­ment noti­ces. In prin­ci­ple, it opens up the pos­si­bi­li­ty of app­ly­ing for inte­rim reli­ef and sus­pen­ding pay­ment for the time being.

Howe­ver, the decis­i­on is not yet final. The tax office has lodged an appeal, and the Fede­ral Fis­cal Court (BFH) will rule on the mat­ter under refe­rence num­ber VIII B 59/26 (AdV). The final decis­i­on has the­r­e­fo­re not yet been reached.

Anyo­ne who has recei­ved simi­lar inte­rest assess­ment noti­ces should keep an eye on the dead­lines and seek tax advice as to whe­ther they might be able to app­ly for a stay of enforcement.

Source: Hau­fe: Tax

This artic­le was crea­ted with the help of AI and has been edi­to­ri­al­ly reviewed.