Fiscal Code (AO)

Historical development and legal basis

The Fiscal Code (AO) is the fundamental law of German tax law, which was promulgated on March 16, 1976 and came into force on January 1, 1977. It replaced the previous Reich Tax Code (RAO) and marked a significant turning point in the tax law system. By the end of 2007, the AO had been modified and supplemented by a total of 101 laws, which underlines its dynamic adaptability to changing economic and legal conditions. The law integrated various earlier legal provisions, including the Tax Adjustment Act, the Act on Enforcement Costs and the Tax Default Act. The Fiscal Code is often referred to as the “basic tax law” as it contains both procedural and substantive regulations for the entire tax system. It creates a uniform legal framework that makes taxation transparent, comprehensible and legally compliant. The system of the law is based on the basic principles of administrative law and at the same time takes into account the special features of tax law. The development of the AO reflects the increasing complexity of the tax system and the growing requirements for efficient tax collection.

Systematic structure and scope of application

The Fiscal Code is divided into nine systematically structured parts that comprehensively regulate various aspects of tax law. The first part contains introductory provisions and defines the scope of application, tax definitions and the responsibilities of the tax authorities. The second part deals with tax liability law and regulates provisions on taxpayers, tax claims and liability issues. The general procedural provisions in the third part lay down the principles for the actions of the tax authorities. The fourth part is dedicated to the specific implementation of taxation, including the registration of taxpayers and obligations to cooperate. The fifth part regulates the collection procedure with provisions on the due date and expiry of tax claims. The sixth part deals with enforcement and the seventh part with extrajudicial appeal proceedings. The eighth part contains provisions on penalties and fines, while the ninth part contains final provisions. The scope of application of the AO extends to all taxes that are regulated by federal or EU law and are administered by federal or state tax authorities. Restricted provisions apply to real taxes, while the provisions are applied analogously to ancillary tax benefits.

Procedural and substantive aspects

The German Fiscal Code combines procedural and substantive tax regulations in a comprehensive set of rules. In procedural law, it defines precise mechanisms for tax collection, assessment and enforcement. The substantive provisions include regulations on tax liability law, criminal tax law and non-profit law. The law creates a uniform framework for taxpayers and tax authorities, ensuring legal certainty and transparency. The procedural provisions regulate in detail the obligations of taxpayers to cooperate, external audits, assessment procedures and legal remedies. Aspects of substantive law concern the definition of tax obligations, liability and tax benefits. The AO defines clear responsibilities of the tax authorities and creates mechanisms for conflict resolution. The provisions on tax secrecy and official confidentiality are of particular importance. The law also regulates interest on tax claims, late payment penalties and security deposits. The system of the AO enables efficient and legally compliant taxation and at the same time protects the rights of taxpayers.

Tax liability law and liability regulations

The tax liability law section of the German Fiscal Code defines comprehensive regulations on taxpayers, tax claims and liability issues. The law distinguishes between different types of taxpayers and regulates their rights and obligations in the tax debt relationship. The liability regulations define precise circumstances under which third parties can be held liable for tax debts. Tax concessions for charitable purposes are also regulated in detail. Tax liability law distinguishes between original and derived tax claims and defines the conditions for their creation, amendment and expiry. The regulations govern the incurrence of tax liability, tax liability and possible exemptions. The regulations on tax evasion and tax-related administrative offenses are of particular importance. The law strikes a balance between the interests of the tax authorities and the rights of taxpayers. The liability regulations cover various case constellations, from the liability of managing directors to liability in the event of legal succession.

Enforcement and appeal proceedings

The Fiscal Code defines detailed regulations on the enforcement of tax claims and extrajudicial appeal proceedings. The enforcement section regulates the enforcement of tax claims using various instruments such as seizure, attachment of accounts and disclosure of assets. The regulations distinguish between different types of enforcement and define the rights and obligations of enforcement debtors. The appeals procedure offers taxpayers the opportunity to lodge an appeal against tax assessments. The AO defines precise deadlines, procedures and responsibilities for appeals. The provisions on the suspension of enforcement and the provisional nature of appeals are of particular importance. The law creates mechanisms for amicable dispute resolution and defines the requirements for judicial reviews. The provisions on legal remedies aim to ensure that the tax administration is monitored in accordance with the rule of law and to guarantee legal protection for taxpayers.

Penalties and fines

The section on penalties and fines in the German Fiscal Code defines the criminal consequences of tax offenses and administrative offenses. The law distinguishes between different types of tax evasion, from simple concealment of income to complex tax schemes. The criminal provisions include both fines and prison sentences and define the requirements for criminal prosecution. Administrative offenses are punished with fines and include minor violations of tax obligations. The AO regulates in detail the responsibilities for the prosecution of tax penalties and defines the investigative powers of the tax authorities. The provisions on sentencing and possible mitigation of penalties are of particular importance. The law creates a comprehensive framework for combating tax offenses and defines clear boundaries between criminally relevant behavior and legal tax arrangements. The provisions on penalties and fines aim to promote tax honesty and effectively prevent tax offenses.