Specifically, the very comprehensive government draft includes the following measures, among others:
- Introduction of a climate protection investment premium through a new Climate Protection Investment Premium Act in the amount of 15 % of eligible expenses, capping the premium at 30 million Euro for a funding period limited until 2029
- Strengthening of tax incentives for research and development by, among other things, expanding eligible expenses and increasing the maximum tax base to 12 million Euro.
- Improvement of the tax loss deduction by extending the loss carryback period and modifying the minimum taxation of loss carryforwards.
- Increase of the MLA limit under Sec. 6 (2) EStG from 800 Euro to 1,000 Euro
- Increase in the value limit for compound items under Sec. 6 (2a) EStG from 1,000 Euro to 5,000 Euro
- Temporary reintroduction of declining balance depreciation for movable assets
- Temporary reintroduction of declining balance depreciation for residential buildings
- Special depreciation according to § 7g EStG in the amount of 50 % instead of 20 %
- Changes to the interest barrier through changes to the exemptions
- Introduction of an interest barrier, according to which interest expenses resulting from business relationships between related parties are not deductible if they are based on an interest rate above the maximum rate (prime rate plus two percentage points) (exception in the case of a proven arm's length agreement)
- Reform of the retention allowance under Section 34a of the German Income Tax Act (EStG), including the possibility to transfer the amount subject to subsequent taxation to the other company upon request in the event of a transfer of assets
- Modifications to the corporate income tax option under Sec. 1a KStG, including extension to partnerships as a whole
- Mandatory use of electronic invoices between domestic companies from 2025 (or from 2027 for companies with a total turnover of up to 800,000 Euro)
- Extension of the obligation to notify cross-border tax arrangements to domestic tax arrangements (determination of initial application by the BMF)
- Adjustment of the tax laws to the elimination of the total assets as of 2024 by the MoPeG.
Note: According to reports, the law is to be finally passed by the end of 2023.