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Effectiveness of Tax Assessment Notices in Insolvency Proceedings

12 October 2022

Roland Speidel, Certified Tax Advisor, Lawyer, Senior Manager, Department Tax & Legal |
Steffen Reusch, BDO Restructuring GmbH
Lawyer, Managing Director

Tax assessment notices may no longer be issued after the opening of insolvency proceedings if they contain so-called insolvency claims (= claims that already existed at the time of the opening of proceedings). As of this point in time, the tax office can only pursue its insolvency claims - like any other insolvency creditor - in accordance with insolvency law and is therefore required to file them in the insolvency table in order to participate in joint satisfaction in the insolvency proceedings. This also applies to tax assessment notices in which the bases of taxation are determined which could affect the amount of the tax claims to be filed in the tax table.

A tax assessment notice issued nonetheless in respect of a tax claim relating to an insolvency claim shall be invalid. However, this does not apply to tax assessment notices which, for example, set the tax at zero euros or a negative VAT, i.e. a refund claim against the competent tax office. In both cases, there are no insolvency claims to be filed in the table and thus no abstract suitability of the notice to affect tax claims to be filed. Up to now, it has been disputed whether tax assessment notices on insolvency claims may be issued by which a positive tax is determined, but which result in a tax refund for the benefit of the insolvency assets due to tax credits such as wage tax or capital gains tax.

In the dispute decided by the BFH ruling of April 5, 2022 (Case No. IX R 27/18), an insolvency administrator submitted an income tax return to the tax office. Based on the declaration, the tax office assessed the income tax in the amount of EUR 29,000. Taking into account the withheld wage tax and capital gains tax, the amount of the refund was EUR 2,500. The insolvency administrator claimed that the tax assessment notice should no longer have been issued after the opening of the insolvency proceedings and was therefore null and void; the fact that a refund was made in the settlement section was irrelevant. The tax court of first instance and the German Federal Fiscal Court (Bundesfinanzhof, BFH) took a different view and confirmed the previous practice of the tax authorities.

Subsequently, a so-called refund notice, such as a zero notice or a VAT notice, with which a negative tax is determined and from which no payment burden arises, represents a further exceptional case for the validity of tax assessment notices in insolvency proceedings. Rather than assessing an insolvency claim, the tax office had assessed a refund amount that was not to be filed in the insolvency table. Moreover, such a tax assessment notice would lack the abstract suitability to have an affect on tax claims to be filed or to impair creditor interests against the background of the need for protection in the insolvency proceedings.

The fact that a conceivable later amendment - for example, in the case of an unlawfully excessive tax credit - could give rise to an insolvency claim that may have been titled by a tax assessment notice that has become final in the meantime is deemed to be irrelevant by the BFH. For this amendment is then subject to the restrictions under insolvency law with the consequence that the insolvency claim would have to be filed in the insolvency table.


The judgment under discussion concerns the complex relationship of tension between tax and insolvency law, but is in line with a recent High Court of Justice ( Bundesgerichtshof, BGH) decision dated January 13, 2022 (Case No. IX ZR 64/21). Pursuant to this ruling, a claim for reimbursement of income tax payments from the period prior to the opening of proceedings belongs to the insolvency estate and not to the insolvency-free new acquisition. The increase in the insolvency estate by tax refund claims of the insolvency debtor generally prevents proceedings that have not been opened for lack of assets or have been discontinued due to insufficient assets.