Late Payment Surcharges Constitutional Since 2022: What Companies Need to Know

Overview of the Federal Fiscal Court’s (BFH) Decision on Suspension of Enforcement (AdV)

In a recent decision on suspension of enforcement (AdV) (Order of March 21, 2025 – X B 21/25), the Federal Fiscal Court (BFH) clarified: Since the sharp increase in market interest rates following Russia’s invasion of Ukraine in February 2022, there are no longer serious constitutional doubts regarding the statutory level of late payment surcharges. This ruling has direct implications for corporate liquidity planning as well as risk and receivables management.

With the onset of the war in Ukraine, market interest rates rose significantly and sustainably from February 2022 onward. The BFH concluded that, at the latest from March 2022, the statutory level of late payment surcharges can no longer be challenged on constitutional grounds.

If the granting of suspension of enforcement (AdV) is made conditional upon a security deposit, the suspension generally takes retroactive effect from the date of the order. Only if the tax office explicitly stipulates a later effective date will the AdV commence upon the actual provision of security.

Analysis: Implications for companies

1. No reliance on constitutional concerns: Companies can no longer invoke constitutional doubts regarding the legality of surcharges. Late payment surcharges at the current statutory rate are legally secure from March 2022 onward.
2. Impact on liquidity management: Late tax payments can now be reliably and permanently sanctioned with surcharges. Companies must tighten receivables management and comply strictly with payment deadlines.
3. Clarity in AdV proceedings: Applicants should pay close attention to whether the tax office requires security — and whether the AdV takes effect retroactively or only upon provision of security. Careful review can help avoid unnecessary surcharges.

Practical recommendations

• Identify liquidity shortfalls early: Payment deadlines vis-à-vis the tax authorities should be treated as a priority.
• Review AdV applications carefully: Pay particular attention to conditions and the timing of effectiveness.
• Adapt risk management: Future financial planning and contractual arrangements should account for potential late payment surcharges.

Conclusion: The BFH has confirmed that, since the rise in market interest rates in 2022, late payment surcharges are constitutional. For companies, this provides greater legal certainty, but also increases the need for stricter liquidity and receivables management.