Federal tax court confirms constitutionality of interest rate applicable to tax payments/refunds

On 1 July 2014, the Federal Tax Court (BFH) confirmed that the 0.5% monthly interest rate that is applied on tax refunds/payments does not violate German constitutional principles. The taxpayer argued that the interest rate imposed on him while the tax payment was suspended during a court proceeding is not in line with economic reality and that the legislator should be required to adjust the rate to (lower) market rates.

Source: Deloitte.

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