Tax law: Even retired managing directors can be liable for the company's tax liabilities

In addition to the taxpayer's payment obligation, tax law provides that managing directors and other legal representatives of natural and legal persons and associations of persons are liable with their own assets for the tax debts of the persons represented by them under the conditions of Section 69 of the German Tax Code (AO).

Prerequisite for a personal liability according to Section 69 AO is that the managing director has violated his/her obligation to submit a tax return or to pay the tax debt. Among these duties is also the so-called obligation to provide for funds (“Mittelvorsorgepflicht”). This means that the managing director must provide for sufficient means, in order to be able to pay a tax when it becomes due. An at least grossly negligent breach of this obligation to provide for funds exists even if the managing director holds sufficient assets on a bank account, but at the same time indications are known that the company will nevertheless not be able to pay the tax burden at maturity (e.g. due to a security right of third parties). The managing director must rather secure the tax payment for the financial administration and may not otherwise deprive the financial administration of access to the bank account. This all applies even if the managing director has already been recalled when the tax becomes due or has resigned from office at that time (Financial Court Berlin-Brandenburg, judgment of January 24, 2019 - 4 K 4233/16).

Conclusion

Whoever resigns as managing director must ensure that the tax authorities can also be satisfied at the time when the tax liability becomes due. If doubts already exist when the managing director leaves the company - e.g. because all assets are already encumbered - the managing director should ensure that sufficient funds are held ready for the tax authorities for the satisfaction of the tax burden and protected from the access of others.