Tax Litigation under German Law

Tax Litigation under German Law

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Tax disputes arise when the taxpayer and the tax authorities disagree over the self-assessed submission made by the taxpayer. Such disputes cannot be resolved through arbitration, but individuals and companies should not feel as if they cannot challenge any claims made by the tax authorities.  Negotiations between the tax authorities and the taxpayer can be successful for the taxpayer, but this is best achieved by having a tax lawyer in your corner.

At Schlun & Elseven Rechtsanwälte, we are a full-service law firm that supports private individuals and companies. Our tax lawyers are available to assist you in any legal dispute and can lead you through the process of any tax litigation which may arise. For specialised guidance in a legal dispute, contact us directly today using our contact details below this article.

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Challenging a Tax Assessment

Disputes can arise in cases where the tax authorities believe that you or your company have not paid what you should have. The tax authorities will send you a tax assessment notice in such a case.

This assessment will be sent six to eight weeks after making a tax return, but it can vary widely. Where this tax assessment notice is received, you will have one month to appeal the decision. You should submit this appeal in writing. However, at this point, there is no requirement to provide the exact reasoning.

If you believe that the tax authorities have made a mistake, then appealing is in your interest. This appeal takes place outside of court at first (§ 347 German Fiscal Code).

Once an appeal has been made, the tax authorities may recognise that a mistake was made. They will analyse the assessments and make a decision. Negotiations can also occur between the two parties to keep the matter out of court. When the tax authorities accept your appeal, they will issue a remedial notice informing you that they are making changes to their decision.

However, the matter may be brought before the Fiscal Court if the tax authorities do not accept your appeal. The tax authorities will outline how such an appeal can be made. There is typically a one-month deadline to submit your appeal. Such tax litigation can be expensive and time-consuming but may also be worthwhile. Make sure to get professional tax law advice throughout the proceedings.

If, as a taxpayer, you realise the information you have provided is incorrect, please consult with your lawyer even if the case is currently ongoing. Withholding such vital information may lead to further problems arising.

Legal Advice: Tax Disputes in Germany

Tax disputes in Germany can arise for several reasons and lead to severe consequences in cases of more serious offences under tax law. These cases, such as tax evasion, can result in significant criminal sanctions such as prison sentences. However, other issues which can lead to tax litigation include:

  • Late payments,
  • Withholding tax payments,
  • False documentation,
  • False returns,
  • Disputes arising during the tax audit,
  • Tax evasion.

One way to resolve a tax dispute before it gets started is to offer a voluntary self-disclosure if you become aware that there were taxes you had not yet paid. However, this decision can lead to more problems than it solves, and legal advice before taking this step is always advisable.

Negotiations between the tax authorities and the taxpayer can also be of benefit. However, there are times when cases reach the tax courts, and such litigation is unavoidable.

Should the decision be made to bring the case before the Fiscal Court, an experienced tax lawyer will allow you to make your case.

Many cases are thrown out due to procedural errors, as they are deemed inadmissible. These include issues which may have had a good chance of success based on their facts. Such procedural errors can revolve around the submission of evidence, the seeking of suspension enforcement and what has been listed in the statement of claim. Do not lose out on your case before it even starts.

Our tax lawyers will ensure that your case does not fall into this trap. With the right plan and preparation, our lawyers can lead you to success in the courts.

Should your tax dispute require an appeal, the case will reach the Federal Supreme Finance Court in Munich.

In this situation, the judges there will assess the consistency of both the application and execution of law by the decisions made in the previous courts. The Federal Supreme Finance Court is the appellate court and hears all cases concerning fiscal issues – including tax litigation.

They will examine the application of the law in your case. Should there be issues concerning the facts of the case, where the fiscal court did not take matters into account, the case can be referred back to the fiscal court.

In making an appeal based on the interpretation and application of the law, it is vital to be assisted by a legal professional. Deadlines must be met, strategies should be decided upon, and case decisions must be analysed.

It is also noteworthy that should a case reach this level, it is compulsory to have professional legal representation. Our lawyers can provide the experienced counsel you need.

Reduce the Risk of Tax Litigation

The essential way to reduce the risk of tax litigation is to have a good relationship with the tax authorities.

Such a relationship can be created by fulfilling your tax obligations before the deadlines. Deal with the tax authorities in a respectful and non-confrontational manner wherever possible.

However, as stated, the tax authorities can also make mistakes and can be challenged if you believe they have made an unfair accusation against you or your business.

Having our tax lawyers at your side will ensure you have a degree of protection when dealing with such issues. Working with our tax lawyers will allow your company to remain confident that they are fulfilling all legal requirements. In such circumstances, you can rest assured that you are in the right in any tax litigation that arises.

The tax lawyers at Schlun & Elseven can help your company design internal tax compliance schemes and provide clear guidance on your requirements under German tax law. Our lawyers will prepare your company for tax audits and any potential investigations which may arise.

Should a dispute arise regardless, our lawyers will seek to resolve matters outside of court, as avoiding cases in the tax courts saves time and money. Having our tax professionals at your disposal means we can negotiate with the tax authorities responsible for your case. Negotiations are particularly worthwhile during complex and cross-border matters.

The tax authorities may have been compelled to act against your company without realising the full details of the transactions. This lack of certainty can put you in a strong position when establishing the facts of the dispute and outlining the law in the area.

Our knowledge of the German Fiscal Code, our experience in such negotiations and our thorough preparation mean that we will be by your side throughout the negotiations.

Successful negotiations can establish good relations between you and the tax authorities and the insight into how to remain compliant in the future. In turn, this can lead to less conflict.

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Practice Group: German Criminal Tax Law

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