In a decision of 25 April 2018, the Federal Fiscal Court (BFH) ruled in favour of a married couple who consider the provision on the amount of interest (6% per year) in § 238 AO unconstitutional. Only recently we reported that in the case of a customs refund, the court also granted interest of 6% per annum on the basis of § 238 AO. It remains to be seen how the administration and courts will react to the regulation of interest rates. Importing companies should monitor developments, particularly with regard to interest rates for customs refunds.
BFH considers 6% per year”unrealistic”
The BFH considers flat-rate interest of 6% per annum unconstitutional because it violates the principle of equality and the prohibition of excessiveness. In times of a structural and sustainable consolidation of the low market interest rate level, the 6 % per year according to the tax code is unrealistic. Today, in view of modern technologies and other statutory interest regulations, such as dependence on the base interest rate, the 1961 legislature’s motivation to enable a practicable and simple interest calculation is no longer relevant.
In the opinion of the Federal Fiscal Court, the legislature is required to make a new regulation on the level of interest for tax purposes.
Effects on interest on customs duties
The BFH’s decision on income tax should in principle have no effect on the interest to be paid by customs debtors. In this respect, there are special provisions on the level of interest in the Union Customs Code (UZK), the legality of which is not decided by the Federal Fiscal Court or the Federal Constitutional Court.
However, this BFH decision could have an impact on the interest to be paid by customs on unlawfully levied import duties. For anti-dumping duties levied under the old Customs Code (CC), the case law on the interest rate of 6% per annum was based on § 238 AO, which the Federal Fiscal Court now considers unconstitutional. Nevertheless, only the Federal Constitutional Court can declare the German interest rate regulation unconstitutional. His decision remains to be seen with suspense.
Whether the UCC also regulates the interest rate for reimbursement amounts that would be less than 6 % per year is controversial and not conclusively clarified. Should the German Fiscal Code also apply here, the future decision of the Federal Constitutional Court would also have an effect on reimbursement interest under the new customs law.
For the time being, companies should always request interest on customs refunds and monitor developments.
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