Insolvency and Taxes in Germany: What Happens to Your Tax Debts?
In Germany, the following can apply for insolvency proceedings:
Private individuals (Privatpersonen) – via private insolvency (Privatinsolvenz / consumer insolvency)
Companies (Unternehmen) – via regular insolvency proceedings (Regelinsolvenz)
Self-employed persons (Selbstständige) – depending on the situation, either consumer or regular insolvency
Yes, in many cases tax debts are treated as ordinary unsecured debts.
They can be included in the general discharge of residual debts (Restschuldbefreiung).
However:
Debts arising from tax fraud (Steuerhinterziehung) or intentional misconduct are usually not discharged.
Certain criminal fines and penalty interest may also remain payable.
| Point | Explanation |
|---|---|
| Can old tax debts be included in the discharge? | Yes – the tax office is treated like any other creditor in the insolvency table |
| Does the Finanzamt have priority? | No, generally it is treated as an ordinary unsecured creditor (except in cases of insolvency offences) |
| Can the Finanzamt oppose the discharge? | Only if bad faith, tax fraud or serious misconduct can be proven |
| Stage | Tax treatment |
|---|---|
| Before opening insolvency proceedings | Tax debts remain your personal or corporate obligations as normal |
| After the insolvency proceedings are opened | The tax claims are transferred into the insolvency estate (Insolvenzmasse) and are administered by the insolvency administrator (Insolvenzverwalter) |
| During ongoing insolvency proceedings | The insolvency administrator must file current tax returns for the relevant periods |
| After completion / Restschuldbefreiung | All old, non-privileged tax debts are generally discharged, except for special cases (e.g. tax fraud) |
| Type of liability | Discharged? |
|---|---|
| Ordinary tax debts (e.g. income tax, VAT from the past) | Yes, in most cases |
| Tax debts arising from tax fraud (Steuerhinterziehung) | No |
| Criminal tax penalties / punitive interest (Strafzinsen) | No |
| Taxes incurred after the opening of insolvency proceedings | No – they remain your personal liability |
Yes.
Insolvency does not remove the obligation to file tax returns.
A tax return must be filed for every relevant year and tax type, even while you are in insolvency.
Depending on the case, this is done either by you or by the insolvency administrator / trustee.
If you are entitled to a tax refund during the insolvency period:
The refund goes directly into the insolvency estate (Insolvenzmasse).
You do not receive it personally.
It is used to partially satisfy the creditors’ claims.
| German term | Arabic meaning |
|---|---|
| Insolvenz | الإفلاس |
| Restschuldbefreiung | الإعفاء من الديون بعد الإفلاس |
| Insolvenzverwalter | الوصي القانوني على أصول المفلس |
| Finanzamt | مكتب الضرائب |
| Steuerhinterziehung | تهرب ضريبي |
| Insolvenzmasse | كتلة أموال الإفلاس |
Old tax debts are usually treated like other unsecured debts and can be included in the discharge of residual debts.
Tax debts arising from fraud or tax evasion are typically not discharged.
You must continue filing tax returns throughout the insolvency procedure.
Any tax refunds during insolvency go into the insolvency estate, not to you personally.
The editorial team of this website strives to provide accurate information based on thorough research and multiple sources. However, errors may still occur, or some details may not yet be fully verified. Please treat the information in these articles as an initial reference only and always consult the competent authorities or qualified professionals for binding, final advice.
