The decision of the Bavarian Administrative Court of January 8, 2026 (22 ZB 25.515) clarifies the strict requirements for the reliability of entrepreneurs under commercial law, especially if there are tax arrears and violations of tax obligations. The case of a real estate agent whose license was revoked according to Section 34c GewO raises fundamental questions about the balance between freedom to practice the profession and the public interest. It is particularly relevant to clarify when tax misconduct justifies a business ban and what role subsequent repayments or objections to the legality of tax claims play.
Tax arrears as an indication of unreliability under commercial law
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The revocation of a business license in accordance with Section 34c Paragraph 2 GewO requires that the trader is unreliable. Unreliability occurs when facts justify the assumption that the person concerned will not comply with the regulations applicable to the business. In the present case, the authority based its decision on significant tax arrears amounting to almost 88,000 euros and on years of failure to submit tax returns and VAT advance returns.
The court confirmed that such violations of tax obligations call into question the reliability of commercial law – even if part of the debt relates to interest, late payment surcharges or late payment surcharges. What is crucial is that the tax debts have been established in a final or enforceable manner. The administrative courts are not obliged to examine the substantive legality of the tax claims. You can rely on the formal validity of the notices, which significantly strengthens the position of the tax administration in such proceedings.
Assessment time: room for subsequent improvement?
The point of contention was the question of whether subsequent circumstances, such as the repayment of tax debts during the legal proceedings, had to be taken into account. The VGH Munich made it clear that the time of the last official decision – i.e. the issuance of the revocation notice – is the only decisive factor for assessing reliability. Later developments, such as the settlement of debts or the settlement of breaches of tax obligations, are not taken into account.
This case law follows a long-standing line of the Federal Administrative Court and other higher administrative courts. It emphasizes that the trader must bear the consequences of his actions, even if he resolves the situation afterwards. The plaintiff had argued that the duration of the proceedings and the interim repayment of the debts represented disproportionate hardship. The court rejected this and emphasized that the unreliability existed at the time of the revocation and cannot be remedied by subsequent measures.
tax evasion
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No examination of the substantive legality of tax claims
Another interesting aspect of the ruling is the courts’ refusal to review the substantive accuracy of the tax claims. The plaintiff had claimed that a large part of the arrears were due to unlawful surcharges and that the tax office had even subsequently forgiven a large part of the claims. However, the VGH Munich pointed out that it is not the task of the trade supervisory authorities or the administrative courts to question the legality of tax assessments. Rather, it is the taxpayer’s responsibility to take action against unlawful claims in a timely manner – for example through objections or legal action before the tax courts. Anyone who fails to do this must bear the consequences, even if it later turns out that the demands were excessive or unjustified. This attitude may seem harsh at first glance, but it follows the principle that legal action against tax assessments must be taken independently and within a time limit.
Limits on freedom to practice a profession
The plaintiff invoked the principle of good faith and her freedom to practice her profession in accordance with Article 12 of the Basic Law. She argued that by tolerating tax arrears for decades, the authority had created a position of trust that now precluded revocation. The court rejected this objection. Even if tax arrears had already existed when the business license was issued, this does not change the current unreliability. In addition, it is up to the trader to regulate his tax affairs and take timely action against unjustified claims. The inaction of the tax administration does not lead to a trust worthy of protection that violations of tax obligations will remain without consequences.
Consequences for traders in the event of tax evasion
Traders who are confronted with tax arrears or breaches of duty should clear them up immediately, before there is a risk of revocation proceedings. Lawyers and tax advisors should inform their clients that the subsequent payment of tax debts does not offer protection against a business ban. Rather, it is advisable to take action against unlawful tax assessments at an early stage and to seek communication with the tax authorities. Otherwise, you risk that even subsequent corrections will no longer be taken into account.
The decision of the VGH Munich clearly shows how strictly the courts interpret the requirements for reliability under commercial law. Tax arrears and violations of declaration obligations are viewed as serious indications of unreliability – even if the debts are later paid off. The decision underlines the need to consistently fulfill tax obligations and take legal action against unjustified claims at an early stage. Prevention and proactive action are therefore crucial to avoid losing your business license. Anyone who fails here must expect far-reaching professional consequences – even if the financial misconduct is remedied later.
Attorney Jens Ferner is a lecturer in commercial criminal law and IT compliance (FH Aachen), a software developer, trained in communication psychology and publishes continuously.
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