Judgment on May 14, 2025: Discharge of Residual Debt and Limited Liability for VAT Debts Post-Insolvency.

• The ruling addresses discharge of residual debt under section 301 of the Insolvency Act and limited liability for VAT debts after insolvency proceedings are terminated under section 211 of the Insolvency Act.
• Liabilities from the insolvency estate are not covered by discharge of residual debt.
• A tax is considered paid without legal grounds even if paid under protest when a permanent objection exists.
• VAT debts as estate liabilities based solely on actions of the insolvency administrator do not result in liability for the debtor’s non-insolvent assets during proceedings.
• This liability limitation continues if proceedings are terminated due to insufficient estate assets and discharge of residual debt is granted.
• The plaintiff’s appeal led to the overturning of the previous court decision and the tax office’s objection decision.
• The tax office’s assessment notice was amended to show a refund claim.
• The tax office bears the costs of the entire proceedings.
• The plaintiff, a business owner, had insolvency proceedings initiated in July 2008, with the administrator continuing operations and indicating insufficient estate assets in September 2008.
• VAT arose from 2008 to 2010 due to continued operations, assessed as estate liabilities, but not paid from the estate.
• Proceedings were terminated in September 2016 after discharge of residual debt was granted.
• In August 2020, the tax office demanded payment of unpaid VAT and related charges, but the plaintiff cited discharge of residual debt and argued for a permanent objection to enforcement, preventing personal liability for estate liabilities.

Source: bundesfinanzhof.de

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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