If you, as a taxpayer, entrepreneur, or investor, are planning a certain tax matter, you can apply to the fiscal authorities for an advance ruling.
This ruling gives you legal security regarding the tax assessment of the matter you present.
Taxpayers, entrepreneurs, or investors who want reliable information on which to base plans for an undertaking in the Federal Republic of Germany can submit specific legal questions to the Federal Central Tax Office (BZSt) and ask for an advance ruling. The BZSt issues an advance ruling only on the tax assessment of the matter presented. The prerequisite for an advanced ruling is that the applicant submits an application to the BZSt, if the BZSt is responsible according to material and territorial jurisdiction pursuant to Section 89 Paragraph 2 Sentence 3 of the German Fiscal Code (AO). In addition, the applicant must give credible fiscal reasons for its particular interest in having this ruling provided.
Under the statutory provisions of Section 89 Paragraph 2 AO, the BZSt is authorized to decide at its own discretion whether or not a ruling can be issued. By issuing an advance ruling, the legislator aims to give the potential investor an opportunity to have the tax issues involved crosschecked before a tax assessment is actually made later on.
An advance ruling cannot be issued if the action is primarily aimed at obtaining some kind of tax advantage (e.g. tax minimization arrangement, tax deferral model, etc.).
An advance ruling can only be issued if, for the most part, the proposition has not yet been realized, i.e. the applicant can still alter arrangements. No possibility to alter arrangements exists if contracts concerning the planned undertaking have already been signed. After the plans have actually been implemented, any legal issues arising can only be decided in a normal assessment procedure.
The applicant must be the party who will be liable to pay tax if the plan is carried out. The founder of a corporation that has yet to be founded may also request an advance ruling for the corporation.
An advance ruling is an administrative act and may be challenged by filing an objection.
By law, the BZSt is only responsible for issuing an advance ruling if, on the date when the application is filed, no German tax office is responsible for taxing the applicant. A foreign investor planning an undertaking in Germany generally does not yet have a competent tax office in Germany. In these cases, the BZSt deals with the application.
The BZSt is only competent for so-called “common taxes” (income tax, corporation tax, solidarity surcharge, and value-added tax). Competence has to be reviewed for each type of tax separately. In addition, the BZSt is responsible for its original functions (including insurance tax, exemption from the capital yield tax).
In some cases, this may mean, for example, that on the application date, a local German tax office is already responsible for dealing with an applicant’s value-added tax, but no German tax office is yet responsible for dealing with its income tax. In any such case, the local tax office already involved has to issue a ruling on value-added tax, while the BZSt is responsible for issues concerning income tax.
Formal application requirements
Applications for advance rulings may be submitted in writing or electronically.
The requirements stipulating the form and content of applications for advance rulings are laid down in Section 1 of the Tax Information Ordinance (Steuerauskunftsverordnung). The information, statements, and warranties specified there are obligatory.
If an application fails to meet any of the requirements relating to form and content, it is possible to subsequently supplement the application. Otherwise, the competent tax authority will refuse to provide a substantive assessment of the matter presented.
Binding effect of advance rulings
An advance ruling issued by the BZSt is binding on the local tax office responsible for assessing the applicant’s tax later on.
If the advance ruling is issued by a tax authority lacking factual and/or local competence, then it does not acquire any binding effect. It is therefore decisive that an application for an advance ruling be filed with the tax authority responsible for issuing it.
The advance ruling issued is only binding for taxing the applicant if the main aspects of the proposal on which the ruling is based have actually been realized.
A fee is charged for processing applications for an advance ruling.
The fees charged depend on the value of the ruling to the applicant (amount at issue). This depends on the tax that will be incurred by the proposition put forward. The application must state the amount at issue along with the basis for its calculation.
For recurring matters, the average tax incurred in any one year should be given. If the amount at issue cannot be determined, then a time fee is charged.
Tax incurred = amount at issue in the ruling applied for: EUR 100,000
Fee charged: EUR 856
The actual advance ruling is always only issued after the payment of the fee.
The fee may be reduced if the application for an advance ruling is withdrawn before the ruling is issued.
The fee is charged in an administrative act, to which an objection may be filed.
The application for an advance ruling may be made in writing or electronically.
Please send written applications to:
Federal Central Tax Office (BZSt)
Department St I 7
An der Küppe 1
If you are submitting an application in electronic form, the application must be submitted in PDF format. As part of representative authority in accordance with Section 80 AO, the application can also be submitted by a representative. In this case, a power of attorney must be attached, providing the applicant’s data (name and address). If this information cannot be found in the power of attorney, this data must be additionally specified in the email.
In light of Section 87a Paragraph 1 Sentence 3 AO (encryption requirement), the BZSt may only send you unencrypted electronic communications with your consent. If you wish to communicate electronically, please give us your consent in the application.
Please send your electronic applications to: Investorenstelle@bzst.bund.de