The German liability notice: when is a director personally liable?

It is an administrative act (Verwaltungsakt): a formal decision of the tax office (Finanzamt), addressed to a named person. What it does is separate the debtor from the payer. The tax itself is owed by the company, and the notice calls on someone else, a person who by law stands behind that debt, to pay it personally. The German Fiscal Code (Abgabenordnung, AO) is where the machinery sits. § 34 AO places a company's tax duties on its legal representatives, so the managing director (Geschäftsführer) of a limited company (GmbH) has to see that the returns are filed and the tax is paid out of the funds under their control. § 69 AO then attaches personal liability where those duties are breached intentionally or with gross negligence, and § 191 AO is the provision under which a liability existing by law is asserted through a notice. That is the framework. Any particular notice is a matter for individual review.

Four things, and they are cumulative. There has to be a tax claim against the company that has not been met, or not met on time. There has to be a breach of a tax duty by the representative, typically returns that were not filed or VAT or wage tax that was not remitted out of available funds. There has to be fault at the required level, meaning intent (Vorsatz) or gross negligence (grobe Fahrlässigkeit). And the tax office has to exercise proper discretion (pflichtgemäßes Ermessen) in deciding whether to call on that particular person at all. The last element is worth naming separately, because it means a breach of duty does not automatically produce a notice against the director: the tax office still has a decision to make, and it has to make it properly. The table below sets the four out in plain English. It describes the framework, not any particular notice.

The table is a description of the general requirements. It is not a checklist for testing whether any real notice is right, and it cannot be used as one.

As a rule one month. A liability notice is an administrative act (Verwaltungsakt), and the remedy the Fiscal Code provides against an administrative act is the objection (Einspruch). The objection period (Einspruchsfrist) is as a rule one month from notification (Bekanntgabe), which is the point at which the notice counts as delivered, rather than the day it was written or the day it was read. Behind that sit the general limitation rules of the Abgabenordnung on assessment and on liability, which govern how long a claim can be asserted at all. Time limits are the part of a German tax letter that is easiest to overlook and hardest to repair afterwards, so the sensible general point is to read the dates and periods stated in the notice itself carefully. Whether and how a remedy is used in a specific case is a question for an adviser who has read the notice.

Not with the notice itself, and it is worth being exact about that. A liability notice (Haftungsbescheid) is a personal matter with a one-month clock on it, and in most cases it needs a lawyer, not a tax filing service. We say so rather than offer work on the notice itself.

What applies on our side is the German VAT underneath the notice. Two pieces of case work fit, both quoted before they start:

• Clearing the company’s tax account (Kontenklärung). We lodge our power of attorney, read the account at the office and put in writing which periods are open, what was estimated, what is owed and why: the takeover with a read of your tax account, €400 fixed.
• An objection where the underlying assessments can still be contested. A liability notice rests on the company’s own assessments; where their deadlines still run, the objection with the real figures is the estimated assessment or hearing case, quoted per case.

We make no claim about what either does or does not change in the liability matter itself; that is the lawyer’s reading. All the case work we quote. The fee covers the work, not the tax office’s decision. No promise as to outcome or result. Quoted and paid before work starts.