Extended Tax Refund Processes Create Multi-Million Euro Risks, Reports BDO
Overly long capital gains tax refund processes at Germany's Federal Central Tax Office (BZSt) are causing significant liquidity disadvantages for claimants. The Federal Court of Auditors (Bundesrechnungshof) has flagged multi-million euro risks.
Germany's Federal Court of Auditors (Bundesrechnungshof) has identified multi-million euro risks stemming from excessively long processing times for capital gains tax refunds at the Federal Central Tax Office (BZSt). According to an analysis by BDO AG Wirtschaftsprüfungsgesellschaft, these extended procedures have resulted in considerable liquidity disadvantages for those entitled to refunds.
The audit report indicates that BZSt has been aware of potential interest claims under EU law for years, but implemented measures have not sufficiently accelerated the processes. The Federal Court of Auditors has highlighted a clear need for legislative action to address shortcomings in national regulations.
In cases where German capital gains tax has been incorrectly withheld in violation of EU law and is subsequently being refunded, there is no national provision for interest compensation. This leaves claimants facing significant liquidity challenges without adequate recompense, leading to legal claims for interest against the BZSt.
The Federal Fiscal Court (BFH) has previously ruled on appropriate processing times and affirmed entitlement to interest for illegally collected capital gains tax refunds under EU law. Despite these judicial pronouncements, the BZSt's processing times remain a point of concern.