Background 

In general, it is contrary to good faith if the creditor seeks to enforce a claim even though they are obliged to return to the debtor what they have obtained. Several Higher Regional Courts have therefore assumed that the insolvency avoidance of the payment of import VAT is inadmissible if this results in an obligation of the insolvency administrator to correct the input tax deduction, as the resulting VAT debt is a mirror-image liability of the insolvency estate. The insolvency administrator would therefore have to repay to the tax office the amount that he would have previously collected from the insolvency avoidance.

Decision

The Federal Supreme Court has left open whether the correction of the input tax deduction can lead to a liability to be paid by the insolvency estate at all. This is a matter for the tax courts to decide. However, the tax authorities cannot claim a special role for themselves in the context of insolvency avoidance. The tax authorities must return contestable payments. It could then pursue its claims like any other opposing party under the provisions of insolvency proceedings law. Should this lead to a back-and-forth payment, however, it should be examined whether the insolvency administrator is personally liable due to the resulting burden on the insolvency estate. This burden for the estate could result from the higher remuneration of the administrator and the resulting reduced satisfaction of the insolvency creditors. 

What's next

The Federal Supreme Court has referred the cases back to the lower courts for further clarification of the facts and subject to this a final decision on the repayment of the import VAT will be made. 

Bundesgerichtshof, 8 Februar 2024, IX ZR 2/22 and IX ZR 107/22 

Find out more

To discuss the issues raised in this article in more detail, please contact a member of our Restructuring & Insolvency team.