Tax Advice

Government draft of a Growth Opportunities Act

A Growth Op­por­tu­nities Act, for which the Ger­man Ca­bi­net ap­pro­ved a go­vern­ment draft on Au­gust 30, 2023, is in­ten­ded to coun­ter­act the eco­no­mic bur­dens of the mul­ti­ple cri­ses for the Ger­man eco­nomy and in­crease its growth op­por­tu­nities. At the same time, howe­ver, it also in­clu­des coun­ter-fi­nan­cing mea­su­res.

Spe­ci­fi­cally, the very com­pre­hen­sive go­vern­ment draft in­clu­des the fol­lo­wing mea­su­res, among others:

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  • 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.

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