Although not explicitly provided for in the law, the Federal Fiscal Court ruled on 6 September 2023 that the exit tax arising in accordance with section 6 AStG is to be deferred permanently and interest-free in the event of an exit to Switzerland - if necessary with the granting of a security line. The judgement also has an impact on other exit cases.
The case
The judgement represents the provisional conclusion of the so-called Wächtler proceedings, on which the European Court of Justice had previously ruled. The plaintiff, Mr Wächtler, owned shares in a corporation and ended his unlimited tax liability in Germany in 2011 by moving to Switzerland. The tax office then assessed an exit tax. A deferral of the assessed exit tax was not granted - in accordance with the statutory requirement.
With reference to the Agreement on the Free Movement of Persons (AFMP) between the European Union (EU) and Switzerland, the plaintiff objected to the assessment of the exit tax. Following preliminary ruling proceedings at the European Court of Justice, the Baden-Württemberg Tax Court also came to the conclusion that the assessment of the exit tax was already inadmissible. The tax office's appeal is directed against this.
Tax assessment permissible but tax to be deferred
Contrary to the opinion of the lower court, the Federal Fiscal Court considers the assessment of exit tax on a move to Switzerland to be permissible. The claim was therefore dismissed. Nevertheless, in the Federal Fiscal Court's view, the ECJ's ruling should be interpreted as meaning that the exit tax should also be deferred permanently and without interest in the case of relocations to Switzerland - if necessary with the provision of a security deposit - at least until the shares are actually sold. The Federal Fiscal Court thus distances itself from a contrary view of the tax authorities (BMF letter dated 13 November 2019, BStBl. I 2019, 1212).
Findings and legal consequences for practice
Although the provision of Section 6 AStG was reformed with the ATAD Implementation Act as of 1 January 2022 and the decision of the Federal Fiscal Court was made on the old legal situation of Section 6 AStG, the following conclusions can be drawn:
For relocations to Switzerland before 1 January 2022, the exit tax is to be deferred permanently without interest until the actual sale of shares. In this case, the deferral can be granted against the provision of security. In the case of relocations to an EU/EEA country, a deferral has already been granted as a rule (without the provision of security).
For relocations after 31 December 2021, the new version of Section 6 AStG only provides for payment of the exit tax in instalments - regardless of whether the taxpayer moves to an EU/EEA country, Switzerland or another third country. A permanent, interest-free deferral is not granted under the current wording of the law. In light of the ruling that has now been issued, it is not clear why the deferral requirement - despite the wording of the law to the contrary - should not also apply to relocations after 31 December 2021, at least for relocations to an EU/EEA country or Switzerland. Taxpayers should therefore challenge the non-granting of a permanent, interest-free deferral of exit tax in exit cases - regardless of the destination state and regardless of any intention to return - and keep comparable cases open under procedural law. It remains to be seen how the tax authorities and legislators will react to the judgement.