Interest on the tax refund: when you are entitled to refund interest

If the processing of your tax return takes a long time, the tax office may owe you refund interest. Interest begins after a statutory grace period and works both ways: back payments are also charged interest. The interest rate was adjusted after a decision by the Federal Constitutional Court.

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Tax refunds (and back payments) accrue interest if a certain grace period has passed between the tax arising and its assessment (as a rule 15 months after the end of the tax year, § 233a AO).

After a decision by the Federal Constitutional Court, the interest rate was lowered to 0.15% per month (1.8% per year). In principle, the tax office sets the interest on its own initiative, but check whether this was done correctly.

What you should do now

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1. Check the grace period
Is there more than the grace period between the end of the tax year and the assessment? Then interest is an option.
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2. Review the interest assessment
Check in the notice whether refund interest is calculated and shown correctly.
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3. React to errors
If interest was wrongly not set or set incorrectly, file an objection.
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4. Note the tax liability
Refund interest can itself be taxable, take this into account in the following return.

How to spot the scam

Despite a long processing time, no refund interest is shown.
The interest calculation seems faulty.
You confuse refund interest with back-payment interest (both exist).

Frequently asked questions

Do I get interest on my tax refund?

Yes, if the statutory grace period (as a rule 15 months) has passed between the end of the tax year and the assessment (§ 233a AO). Then the tax office pays interest on the refund. The same applies conversely for back payments.

How high is the interest rate?

After a decision by the Federal Constitutional Court, it was lowered to 0.15% per month, i.e. 1.8% per year. Previously it was 0.5% per month. The interest period begins after the grace period expires.

Do I have to apply for the interest?

In principle, the tax office sets the interest on its own initiative. But check the notice: if refund interest is not shown despite a long processing time or is calculated incorrectly, you can file an objection within the deadline.

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General information for self-help, not legal advice (RDG). In case of a high loss or uncertainty: contact a consumer advice center or a lawyer.