Tax Litigation in Germany

The Tax Procedure Act in Germany

The main legislation tax litigation in Germany is based on is the Tax Procedure Act. The law allows for the enforcement of tax assessment notifications sent by the authorities without additional actions. This legislation is mostly used in debt collection procedures. However, there are certain requirements the authorities must fulfill in order to appeal to these procedures:

• -          the taxes must have been assessed in a timely manner,
• -          the notice of assessment must have been received by the taxpayer,
• -          a demand for payment must have been issued,
• -          the payment period must be overdue before enforcement.

All tax related disputes are handled by the German Tax Court.

For more information about the Tax Procedure Act you may refer to our German attorneys.

Tax disputes in Germany

Because taxes in Germany are levied based on a self-assessment system, taxpayers usually file the required documents with the authorities who then issue the notifications. These notifications refer to:

• -          VAT payments,
• -          withholding tax payments,
• -          payroll taxes.

These are also the main cases tax litigation usually refers to in Germany. In order to avoid debt recovery proceedings, the taxpayer can file for a stay of collection or they can contest the assessment with the Tax Court. In case of tax disputes, one must pay serious attention to filing deadlines with the Tax Court, which why legal representation from a German law firm is usually recommendable.

If unsatisfied with the decision of the local Tax Court, the taxpayer can appeal to the Federal Tax Court.

Settlement of tax litigation in Germany

The German tax legislation does not allow parties to reach an amicable agreement in case of litigation, therefore arbitration is not possible in tax disputes. However, the parties can reach a “factual agreement” which refers to the circumstances the tax legislation was applied. These agreements allow for the involvement of third parties, such as tax auditors for an improved assessment of the situation. Factual agreements are usually used in commercial tax disputes.

Whether you need legal assistance in tax litigation case or another type of dispute you can contact our lawyers in Germany for assistance.