Tax Policy Demands for Economic Growth in Germany

On 26 February 2025, the European Commission presented proposals for simplifying the Carbon Border Adjustment Mechanism.

Tax incentives for the research and development (R&D) activities of small and medium-sized enterprises (SMEs) are not exclusive to Germany. In a comparative article, experts from the RSM network provide an overview of tax incentives for R&D in various countries.

According to the German Federal Fiscal Court, a pure holding company in the form of a partnership can only deduct 60 % of its general administration costs for tax purposes.

Restructuring concepts are created for various purposes, such as a basis for a financing decision in crisis situations, as a relief for creditors who, being aware of a (impending) insolvency of the debtor, agree to a partial payment agreement, or to avoid criminal or civil liability of the management.

If distributions by a corporation resident in Germany to its shareholders result from the repayment of capital previously contributed by the shareholders to the corporation, these are generally tax-free, considering the order of use according to Sec. 27 (1) 3 and 5 of the German Corporate Income Tax Act (“KStG”). Whether this also applies to distributions by a corporation resident in a third country (third-country corporation) to its domestic shareholders has been controversially discussed in the past and has been legally regulated in the meantime.

With a comprehensive application letter, the German tax authorities (BMF) addresses the restrictions on the deduction of business expenses according to Sec. 4k German Income Tax Act (EStG), which are generally to be applied to expenses incurred after 31 December 2019.