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Assessment of contributions only permissible within a definite period of time
Press Release No. 19/2013 of 03 April 2013
Order of 5 March 2013
1 BvR 2457/08
Contributions due for benefits cannot be assessed within an indefinite period of time after the benefit has been received. Instead, the legislature must achieve a balance between the public interest in the levying of the contribution and the interest of the person liable to pay the contribution in obtaining clarity about the extent of the payment. This is what the First Senate of the Federal Constitutional Court decided in an order that was published today. At the same time, the Senate declared a provision of the Bavarian Municipal Charges Act (Bayerisches Kommunalabgabengesetz) incompatible with the constitutional principle of legal certainty because the provision does not consider at all that the person liable to pay the contribution has an interest in a time limit for the levying of charges. The Land legislature was requested to enact a constitutional provision by 1 April 2014.
Essentially, the decision is based on the following considerations:
1. According to Bavarian law, the time-limit for the assessment of municipal contributions is four years. As a general rule, the time-limit starts to run at the end of the year in which the duty to pay the contribution has arisen. In this regard, the Bavarian Municipal Charges Act makes reference to the Federal Fiscal Code. Article 13 sec. 1 no. 4 letter b double letter cc indent 2 of the Bavarian Municipal Charges Act, however, makes special provision for the case of invalidity of the rules on contribution: in this case, the time-limit starts to run only at the end of the calendar year in which valid rules have been published.
2. From 1992 to 1996, the complainant was the owner of built-up property which was connected to the local drainage system. During an inspection of the property in 1992, the local authorities found out that the top floor of the building had been converted. However, they levied a drainage construction contribution for the converted surface of the top floor from the complainant only in a subsequent assessment order of 5 April 2004. The order was based on Rules Governing Contributions and Fees which supplemented the Drainage Rules of 5 May 2000. To remedy the voidness of the previous Rules, the local authorities had enacted the Rules with retroactive effect as from 1 April 1995. During the complainant's objection proceedings, these Rules proved void as well. The local authorities thereupon adopted new Rules and put them into force retroactively as from 1 April 1995. The new Rules were published in the Municipal Gazette on 26 April 2005.
3. The action brought by the complainant against the assessment order and against the ruling by the local authorities on the complainant's objection was unsuccessful before the Administrative Court and the Higher Administrative Court.
4. The constitutional complaint lodged against these decisions is admissible and well-founded to the extent that it challenges a violation of the constitutional principle of legal certainty.
a) If no independent new violation of the right to a hearing in court committed by the court of appeals is alleged, a complaint that alleges a violation of this right does not need to challenge also the ruling of the court of appeals to satisfy the requirement that all legal remedies must have been exhausted before a constitutional complaint is lodged.
b) In the case at hand, the constitutional standards for the permissibility of retroactive laws are not violated. As far as the complainant is concerned, Art. 13 sec. 1 no. 4 letter b double letter cc indent 2 of the Bavarian Municipal Charges Act does not have retroactive effect. The Act entered into force on 1 January 1993. At that time, no Rules existed that effectively remedied the voidness of the existing Rules within the meaning of the provision. Such Rules with effect as from, or before, 1 January 1993 did not enter into force at a later date either. Irrespective of the new legislation, the period of limitation had therefore not begun to run.
c) However, the provision in question violates Art. 2 sec. 1 of the Basic Law (Grundgesetz - GG) in conjunction with the principle of legal certainty, which is an essential component of the principle of the rule of law entrenched in Art. 20 sec. 3 GG, in its manifestation as principle of clarity and predictability of burdens.
aa) In their interaction with the fundamental rights, legal certainty and the protection of confidence guarantee the reliability of the legal order, which is an essential prerequisite for self-determination over one's own life choices and their implementation. The principle of the protection of confidence means that the citizens must be able to rely to a certain extent on the continuance of certain statutes. Furthermore, under specific circumstances, the principle of the rule of law guarantees legal certainty even if no statutes exist that give rise to specific confidence, or if circumstances exist that are even contrary to such confidence. In its manifestation as principle of the clarity and predictability of burdens, the principle of the rule of law protects against using events that occurred a long time ago and are de facto completed as a link for imposing new burdens.
bb) If obligations to pay contributions in return for benefits link to facts in the past, it is required under constitutional law to establish a time-limit for the obligation to pay.
The aim of limiting payment claims of state authorities is to achieve a fair balance between the justified interest of the public in the comprehensive and complete realisation of these claims on the one hand, and the citizens' interest, which is worthy of protection, on the other hand, in no longer having to expect at some point in time to be liable to make a contribution, and in being able to plan accordingly. It is a characteristic of statutes of limitation that they apply without evidence that confidence existed in an individual case, without confidence that is typically assumed, and in particular without confidence being actively exercised. Instead, they derive their justification and their necessity from the principle of legal certainty.
When levying contributions in return for benefits, the legislature is obliged to enact statutes of limitation, or at least to ultimately ensure that such contributions cannot be assessed for an unlimited time after the benefit has been received. Contributions derive their legitimation from compensating a benefit that the persons concerned received at a certain point in time. The longer ago this point in time was at the time when the contributions are assessed, the more does the legitimation to assess such contributions decrease. The principle of legal certainty demands that the recipient of a benefit obtains clarity in reasonable time about whether, and if so, to what extent, contributions must be paid in return for the benefits received.
cc) In Art. 13 sec. 1 no. 4 letter b double letter cc indent 2 of the Bavarian Municipal Charges Act, the legislature failed to achieve the necessary balance between legal certainty on the one hand and the validity of the law and the fiscal interest, on the other hand. By postponing the beginning of the period of limitation without setting any time limit, the legislature does not at all take into account the citizen's justified interest in not having to expect the assessment of the contribution if a certain time has passed after the benefit arose.
5. As the legislature has several possibilities of remedying the unconstitutional situation at its disposal, in the case at hand it is only possible to declare the provision in question incompatible with the Constitution. This has the consequence that the unconstitutional provision may no longer be applied by courts and administrative authorities. Pending court and administrative proceedings in which the decision depends on this provision remain suspended or are to be suspended until a new legislation is enacted, at the latest, however, until 1 April 2014. If the legislature has not enacted a new legislation until 1 April 2014, the unconstitutional provision will be void.