With its judgment of June 14, 2024 (Case No. 4 K 2351/23), the Münster Tax Court clarified that the imposition of a late filing penalty for delayed submission of a tax return that results in a tax refund is not automatically lawful. The occasion was a specific case: the 2020 income tax return was submitted after the deadline and resulted in a refund. Nevertheless, the tax office imposed a late filing penalty of €175—a minimum amount of €25 for each commenced month of delay. .
Legal framework and purpose of the late filing penalty
Norm structure in the Fiscal Code
According to Sec. 152 (1) AO, the tax office has discretion (decision-making authority) to impose a penalty for untimely filing—provided the delay is not excusable. Deviations in cases of tax refunds or zero assessments are explicitly possible. .
From the 15th month of delay onwards, a mandatory provision applies (Sec. 152 (2), (5) AO): The penalty is at least €25 per month or 0.25% of the determined tax. .
Functional background
The penalty is intended to ensure the timely submission of tax returns (preventive aspect) and to offset any advantage gained by the taxpayer through late filing (repressive aspect). .
Key findings of the Münster Tax Court
Discretionary power in refund cases
Since the late submission led to a refund (Sec. 152 (3) No. 3 AO), the imposition of the penalty is not automatic; the exercise of discretion must be reviewed. .
Discretionary review by purpose
The court demanded that the exercise of discretion particularly take into account the following aspects:
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Duration and frequency of the missed deadlines
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Amount of the tax case (zero assessment, additional payment, or refund)
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Fault on the part of the taxpayer
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Impact on the assessment procedure and the tax authorities
In the case at hand, the tax office limited itself to the duration of the delay and fault, ignoring the refund effect and previous conduct—a violation of the required discretionary assessment. .
Significance for taxpayers and the tax authorities
Rights and obligations for taxpayers
Anyone expecting a refund after late filing cannot automatically be subject to a late filing penalty. An excusable fault, brief delay, and absence of disadvantages for the tax authority may warrant mitigation. .
Requirements for the tax authority
Automated notices without individual review are deficient. Complete documentation of the discretion exercised—including the economic consequences of the case—is essential. .
Differences in the legal framework before and after 2019
After the legislative amendment in 2019, there is a clearer distinction between automatic penalty imposition in cases of additional tax payments and discretion in cases of refunds (Sec. 152 (2)-(3) AO). With this decision, the Münster Tax Court strengthens the importance of this legislative regime. .
Practical recommendations for action
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Objection against the penalty notice: Especially in cases of refunds, the absence of discretionary reasoning by the tax office should be contested.
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Application for individual case review: Emphasize that there was no disadvantage for the treasury, the fault was minor, and the delayed credit did not affect any legal rights.
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Timely request for deadline extension: Justifies delays in many cases and minimizes the risk of penalties. .
Outlook for administrative practice and legal certainty
This judgment significantly strengthens the position of taxpayers in refund cases. In the future, tax offices must document much more extensively and present individual case-specific reasons. The decision can also serve as a basis for further reviews where similar legal situations arise.
Companies, investors, as well as high-net-worth individuals who have received late filing penalties in connection with tax refunds or whose tax cases are in this transitional situation may contact MTR Legal Rechtsanwälte for in-depth analysis and strategic support. Whether for objections or administrative proceedings—we are happy to assist you with your individual matter.
