Uncertainties regarding sustainability reporting for 2024

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.

The German Federal Ministry of Finance (BMF) published the updated 2024 Transfer Pricing Administrative Principles on 12 December 2024, which also address the new requirements for cross-border group financing according to Sec. 1 (3d) Foreign Tax Law (AStG) and clarify their application in several aspects.

With the German Bundestag soon to be re-elected, entrepreneurs are more concerned than ever about the changes to tax and business law they will face after the turn of the year. Numerous regulations have already been finalized and will apply from 2025. You can find an initial, though not exhaustive, overview of the key new tax and business law regulations in Germany for you and your company here.

After the German Federal Council approved the Annual Tax Act 2024 on 22 November 2024 and the law was published in the Federal Law Gazette on 5 December 2024, the regulations contained therein can enter into force.

In case a corporate group falls under the provisions of the global minimum tax (GloBE) and has business units in Austria, there may be an obligation to report the so-called taxpayer there. This obligation must be fulfilled by 31. December 2024.