Federal Fiscal Court ruling: Fees for binding rulings under section 89(2) and following of the Fiscal Code

Binding rulings as a means of obtaining legal certainty

Alongside instruments such as the binding assurance (verbindliche Zusage) (section 204 of the Fiscal Code) and the wage tax ruling upon request (Anrufungsauskunft zur Lohnsteuer) (section 42e of the Income Tax Act [Einkommensteuergesetz–EStG]; on the limited binding effect, see most recently Federal Fiscal Court judgement of 9 Apr 2026, VI R 1/24, para. 45), the Fiscal Code also contains the binding ruling contained in section 89(2) and following. This instrument can clarify in advance the tax assessment of precisely defined, as yet unrealized circumstances by the tax authority and within the framework laid down by section 89(2) and following of the Fiscal Code. This binding ruling thus differs fundamentally from the insurance of tax risks, which has become popular in recent years and which is taken out with a private-sector insurer.

Section 89(2) sentence 5 of the Fiscal Code authorises the Federal Ministry of Finance, with the consent of the Bundesrat, the upper house of parliament, to adopt more detailed provisions by statutory instrument on the particularly important issues of the form, content and conditions of the application for a binding ruling and on the scope of its binding effect. The Federal Ministry of Finance fulfilled this task in the Ordinance on Binding Tax Rulings [Steuer-Auskunftsverordnung–StAuskV].

Taking the provisions of the Fiscal Code and the Ordinance on Binding Tax Rulings together, the taxpayer is given the possibility of assessing in advance the income tax consequences of a restructuring, for instance. However, no major steps towards implementing it may be taken beforehand (section 1(1) no. 2 of the Ordinance on Binding Tax Rulings), unlike with private insurance of tax risks. A further potential stumbling block in a restructuring is that in the context of larger reorganisations the person who will in future trigger a tax event frequently does not yet exist. In these cases, the application for a binding ruling may also be made by a third party, provided the third party can also demonstrate its own legitimate interest in the ruling (section 1(4) sentence 1 of the Ordinance on Binding Tax Rulings).

Fees for binding rulings 

In contrast to the “free” wage tax ruling upon request under section 42e of the Income Tax Act (“always free of charge”, Federal Ministry of Finance Circular of 12 Dec 2017, Federal Tax Gazette [Bundessteuerblatt–BStBl.] I 2017, p. 1656, para. 1), for a binding ruling fees are levied. According to the wording of the Act, the fee is charged not for issuing it but for “processing requests for advance rulings” (section 89(3) sentence 1 of the Fiscal Code). The amount is calculated “on the basis of the value that advance ruling represents to the applicant (object value)” (section 89(4) sentence 1). According to this, for applications received by 1 June 2025, the maximum fee amounted to EUR 128,038 (Application Circular to the Fiscal Code [Anwendungserlass zur Abgabenordnung–AEAO] on section 89, at 4.2.4.), since the object value is capped at EUR 30 million by analogous application of section 39(2) of the Court Costs Act [Gerichtskostengesetz–GKG] (section 89(5) sentence 2). If the object value is less than EUR 10,000, no fee is levied (section 89(5) sentence 3).

For income-tax purposes, the fee constitutes a non-deductible ancillary payment (section 3(4) no. 7) to the income taxes that are themselves non-deductible (Federal Fiscal Court judgement of 8 Dec 2021, I R 24/19, Federal Tax Gazette II 2024, p. 550, para. 62), with the result that the fee must be paid “gross” (section 12 no. 3 second half-sentence of the Income Tax Act; section 10 no. 2 second half-sentence of the Corporation Tax Act [Körperschaftsteuergesetz–KStG]; section 4(5b) of the Income Tax Act).

Where there are several applicants (e.g. Federal Fiscal Court judgement of 3 Jul 2025, IV R 6/23, DStR 2025, p. 2138) and several steps to a restructuring, it is frequently questionable how many fees the tax authorities may assess. In judgement II R 38/23, the second chamber of the Federal Fiscal Court had to assess an extensive planned restructuring with regard to the fee notices for the binding rulings applied for it. A particular feature was that issuance of the binding rulings in the matter had been rejected (a “negative ruling” [Negativauskunft]).

The number of fees is determined by the number of sets of circumstances that are the subject of the ruling. Circumstances for the purposes of an application for a binding ruling are understood as “the intention planned by the applicant”, which is not confined to individual facts or a single feature of a statutory definition of significance for tax law, but rather encompasses a “single course of events”. In an overall appraisal of the circumstances of an individual case, it is to be assessed whether various (individual) measures sufficiently stand in substantive and economic connection with one another such that, taken as a whole, they still reveal a single, well-defined overall intention.

This consideration can be compared to the definition of the feature of “particular circumstance” (“bestimmter Sachverhalt”) in section 174 of the Fiscal Code. The “particular circumstance” is not limited to a single assessment period, and the “proper taxation conclusions” cannot be drawn from a single assessment period either (Federal Fiscal Court judgement of 14 Nov 2012, I R 53/11, para. 15). “Particular circumstance” as defined by this provision is a tax-relevant course of events to which the statute attaches tax consequences (Federal Fiscal Court judgement of 18 Feb 1997, VIII R 54/95, Federal Tax Gazette II 1997, p. 647) very similarly to what has now been decided for binding rulings.

Fees even in the case of a negative ruling

The second chamber of the Federal Fiscal Court further regards the levying of fees as justified even where a binding ruling is refused. In accordance with the “cost-compensation and benefit function of the levying of fees”, the fee for issuing a binding ruling is intended, in a constitutional manner, both to settle the particular administrative expense incurred by the authority in issuing it and as compensation for the benefit to the applicant arising from the binding effect of the ruling (Federal Fiscal Court judgement of 3 Jul 2025, IV R 6/23, para. 48).

In the view of the Federal Fiscal Court, a negative ruling, just like a positive ruling, constitutes a “tax assessment” as defined by section 89(2) sentence 1 of the Fiscal Code, on which the applicant may base its own arrangements. Although it may not be the ruling that was desired, it can nonetheless protect the applicant from an impending tax burden – in the sense of the “benefit compensation function” of the levying of fees, in that the circumstances set out are not realised.