The legislator has reduced the interest rate for interest on arrears and tax refunds in accordance with secs. 233a and 238 of the German Fiscal Code from 6% to 1.8% per annum. The new interest rate applies to interest periods from 1 January 2019 onwards. This was decided by the German Bundestag (on 23 June 2022) and the German Bundesrat (on 8 July 2022).
In doing so, the legislator intends to fulfil its obligation under the Federal Constitutional Court’s judgment of 8 July 2021 to newly regulate the amount of interest set down in sec. 233a of the German Fiscal Code. Unfortunately, the legislator fails to take the opportunity to further reform the interest regulations of the German Fiscal Code. Thus, for all other types of interest (in the case of suspension of execution, deferral, evasion, litigation), the rate remains at 6% per annum. Further court disputes are thus foreseeable.
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