Interest rate for interest on arrears and refunds is unconstitutional

The statutory interest rate of 6 % for interest on arrears and refunds has been unconstitutionally high since 2014.

According to the Federal Fiscal Court, the Federal Constitutional Court also considers the interest on tax arrears and refunds at an interest rate of 0.5 % per month after the interest-free grace period of 15 months to be unequal treatment of taxpayers whose tax is not assessed until after the end of the grace period compared with taxpayers whose tax is already finally assessed within the grace period. The Federal Constitutional Court considers this unequal treatment to be still constitutional for interest periods from 2010 to 2013, but unconstitutional as of 2014.

Despite the unconstitutionality, the court still allows the application of the previous law for interest periods until the end of 2018. From 2019, on the other hand, the provisions are in principle inapplicable, and the legislature must adopt a new regulation in line with the constitution by July 31, 2022. You can read more about this topic in an upcoming issue.