The German Ministry of Finance has published a draft bill to amend the 6% per annum interest on back taxes and tax refunds, which was found unconstitutional from 2014 onwards by the Federal Constitutional Court in July 2021. In particular, the Court found that that the interest incurred on back taxes and the interest paid for tax refunds pursuant to § 233a in conjunction with § 238(1) first sentence of the Fiscal Code (Abgabenordnung – AO) is unconstitutional insofar as the interest is fixed at 0.5% per month (6% per annum) for periods from 1 January 2014. As a result, the Court ordered the enactment of new provisions by 31 July 2022, which must apply retroactively to all interest periods from 2019 onwards and to all acts of public authority that have not yet become final, while retroactive application of the new provisions is not required in respect of interest incurred from 1 January 2014 to 31 December 2018.
Source Orbitax
