Waiver conditions

An application for the waiver of default interest must be submitted before the expiry of the period for payment of the tax, i.e. within six years of date of the obligation to pay the tax. The tax authority may meet this claim if two basic conditions are met:

• the tax assessed, the non-payment of which gave rise to interest, has been paid; and
• the taxpayer has not seriously breached tax or accounting regulations in the last three years.

Serious breaches include, for example, the assessment of tax according to the aids the tax authority has at its disposal, repeated calls for the submission of tax returns, reports or accounts, or fines imposed for the breaches of tax or accounting obligations. Where the tax entity is a legal person, this condition is also assessed for members of its statutory body.

Justifiable reasons

Interest can only be waived if the claimant proves that there is a justifiable reason for the delay in paying the tax. In the administrative practice of the tax administration, these reasons are, according to the instruction for waiver, e.g.:

• adverse health condition of the taxpayer (waiver of up to 100%);
• natural disaster affecting the taxpayer (waiver of up to 100 %);
• late payment of an advance payment liability if the total tax obligation does not arise or is lower than the advances paid (waiver of up to 70%);
• the assessment of tax on the basis of an additional tax claim submitted by the taxpayer without a call from the tax authority (waiver of up to 20 %); or
• tax payment deferral linked to the interest on the amount deferred the waiver of which is claimed (20 %).

However, the waiver is possible beyond the framework of the waiver guidelines (but within the framework of de minimis aid). The case law has held that such a reason for waiving beyond the guidelines may be, for example, unclear legal regulations relating to the assessment of the tax. The claimant may also demonstrate, beyond the justifiable grounds, their economic situation for which the amount of interest assessed constitutes an unreasonable harshness of the law. A proven adverse economic situation may justify an increase in the waiver (but only if there is a justifiable reason). Conversely, in the event of a breach of tax administration obligations, the tax authority may reduce the amount of the waiver.

Reasons that cannot be considered justifiable

The case law also contains reasons that cannot be considered justifiable. Such reasons include, for example, human failing without involvement of extraordinary circumstances, poor communication between employees and the tax adviser, covid measures as an excuse without a direct link to the delay, assumption by an employee of the tax entity that the tax return was filed by the tax advisor. According to court case law, the failure of the taxpayer to bear the burden of proof is also not a justifiable reason. If the taxpayer fails to prove their expenses or income, which is their obligation, the tax administration does not consider this fact to be a reason to waive interest.

The fact that the taxpayer otherwise properly fulfils their tax obligations and provides the tax administrator with cooperation is not in itself a justifiable reason for delay either. Nor is the fact that the taxpayer is otherwise complying properly with their tax obligations and is providing the tax administration with cooperation a justifiable reason for delay in itself. The administrative courts consider compliance with the law to be a fundamental obligation of every taxpayer and cannot therefore be regarded as a special reason for waiving the interest. Furthermore, the Supreme Administrative Court has held that default interest cannot be waived if the taxpayer deliberately provided incorrect information or acted with the intention of influencing the amount of the tax obligation.

It can thus be summarised that the waiver of default interest and interest on the amount deferred depends on an assessment of the specific circumstances of each case. Taxpayers should carefully justify their claim for the waiver and assess whether they meet the statutory conditions for such a waiver. Consultation with a tax law expert can contribute significantly to a successful application filing.