No back interest is payable on interest-free deferred tax claims during Corona, according to a ruling by the Münster Finance Court on October 26, 2022 (Ref.: 13 K 1920/21).
Corona presented many companies and self-employed individuals with enormous financial challenges. To support them, the Federal Ministry of Finance arranged during the pandemic that tax claims could be deferred interest-free under certain conditions, explains the commercial law firm MTR Legal Rechtsanwälte, whose lawyers also advise on legal issues surrounding Corona.
The Münster Finance Court has now determined that back interest must be waived if there was a claim for interest-free deferral of the tax payment. In the underlying case, the tax office assessed the corporation tax for the year 2018 against a club in May 2020. Since the club had to pay back taxes, the tax office also set the back interest. According to the letter from the Federal Ministry of Finance dated March 19, 2020, on “Tax Measures to Consider the Impact of the Corona Virus,” the club applied for the interest-free deferral of all payment claims from the 2018 corporation tax notice.
While the tax office granted the interest-free deferral of the tax claim, it rejected the waiver of back interest. The club objected, arguing that the interest would not have arisen if the tax office had issued the corporation tax notice before April 1, 2020.
The lawsuit was successful at the Münster Finance Court. The back interest must be waived, the court stated. It reasoned that the collection of back interest was objectively unreasonable. Due to the delayed tax assessment, the claimant did not gain a liquidity advantage, nor did the tax office suffer a liquidity disadvantage. In principle, the tax assessment made in May 2020 was indeed suitable to trigger a liquidity advantage that the tax office wanted to claim. However, since the claimant undeniably had a claim to the interest-free deferral of corporation tax repayment due to the BMF letter from March 2019, it is not apparent where an additional liquidity advantage from the delayed tax assessment should lie, the court said, allowing the appeal to the Federal Fiscal Court.
Even though the Corona situation has since relaxed, legal questions remain. The lawyers at MTR Legal advise on legal issues related to Corona.
