Appeal procedures in tax law
The An objection procedure is an out-of-court appeal procedure, as expressly provided for by the legislature in tax law. As a general rule, the first step is to lodge an appeal; only if this does not produce the desired result should legal action be taken before the tax courts. In the majority of cases, the out-of-court appeal procedure is successful. This is particularly true when you have us on your side – a team of experienced solicitors, specialist solicitors and tax advisers. We advise you on the prospects of success, draft the appeal and, if you wish, handle communication with the tax authorities.
What exactly is the appeal procedure?
The objection procedure, as an out-of-court remedy under tax law, is governed by Part Seven of the German Fiscal Code (Sections 347 et seq. AO). As a general rule, and subject to other jurisdictions, the appeal is always the remedy available against administrative acts in tax matters. It may be submitted in writing or electronically, or declared for the record. It does not need to be specifically designated as such, but it must identify the appellant.
When can you lodge an appeal?
The prerequisite is that the taxpayer is adversely affected by an administrative act – usually a tax assessment notice – or by the failure to issue such an act. Furthermore, administrative acts may only be challenged to the extent that their findings are not based on a so-called „basic notice“. In such cases, it is not the subsequent notice – which merely incorporates the findings of the basic notice – that must be challenged, but rather the basic notice itself.
What is the deadline?
The time limit for lodging an appeal is one month from the date of notification. In the case of domestic postal delivery, the administrative decision is deemed to have been notified on the fourth day after it was posted, unless it was not received or was received at a later date.
What is the effect of the objection?
As a rule, the appeal does not suspend the enforcement of the contested administrative act; in particular, it does not prevent the collection of the levies in question. However, the authority may suspend enforcement in whole or in part. This is to be done upon application where there are serious doubts as to the lawfulness of the contested administrative act – or where enforcement would result in undue hardship. If charges have already been paid, the enforcement may be suspended upon application, subject to the aforementioned conditions. Charges already paid will then be refunded pending a decision.
How is this decided?
Where the decision on the objection depends, in whole or in part, on other legal proceedings, the authority may, on its own initiative, suspend the decision until those proceedings have been concluded; in certain circumstances, it may also do so at the suggestion of the objector. With the consent of, or at the request of, the appellant, the authority may also stay the proceedings on important grounds. The proceedings are stayed without consent if the objection is based on the constitutionality of a legal provision or on a legal issue pending before a federal court or the European Court of Justice – or if the stay of proceedings has been ordered by a general ruling published publicly.
The objection may be withdrawn at any time until the decision is announced.
The tax authority shall rule on the appeal by means of an appeal decision. If the appeal is upheld in whole or in part, the decision shall, as a rule, take the form of an administrative act that has been amended accordingly and is linked to the decision. If the appeal is not upheld, a separate notice of rejection of the appeal is issued. The decision must be made in writing; it must state the grounds on which it is based and include information on the available legal remedies.
When reviewing a notice of rectification or a decision on an objection, compliance with procedural law must be examined in addition to substantive law. For example, a further appeal may be lodged against an amended decision which upholds an appeal in its entirety. Procedural errors may result in extended time limits, delaying or preventing notification; they may even render the administrative act null and void.