Germany: Tax proposals in new federal government’s coalition agreement

The coalition agreement provides for a large number of separate tax proposals.

The coalition agreement provides for a large number of separate tax proposals.

Approximately nine weeks after the parliamentary elections, the Social Democrats (SPD), the Greens (Bündnis 90 / Die Grünen), and the Free Democrats (FDP) agreed on a coalition agreement.

The ministries have been distributed among the parties, with the federal ministry of finance going to the FDP.

The coalition parties emphasized that the application of “fair taxes” forms the basis for a state’s ability to act. The tax sys­tem is intended to become much simpler for individuals and companies. Digi­talization and de-bureau­cra­tization of the tax administration are to be promoted. Tax evasion and tax avoidance are to be addressed more intensely. 

Tax proposals

The coalition agreement provides for a large number of separate tax proposals, including:

  • Introduction of a limitation on interest rates for tax purposes to supplement the interest limitation rules
  • Expansion of withholding taxation, in particular through an adjustment to income tax treaties
  • Introduction of a reporting obligation for national tax arrangements of companies with a turnover greater than €10 million
  • Introduction of a “super depreciation” for climate protection and digital assets in the years 2022 and 2023
  • Expansion of the extended loss offset (€10 million instead of €1 million) until the end of 2023 and extension of the loss carryback to the two immediately preceding years
  • The closing of tax loopholes used by corporate groups in the acquisition of real estate (share deals) for reciprocal financing purposes
  • Increase to the depreciation rate for new residential buildings to 3% (from 2%)
  • Measures to address the illegal financing of real estate through suitable measures (such as through proof of taxation required for commercial and private real estate buyers from abroad for any acquisition of real estate in Germany, as well as a ban on purchasing real estate with cash)
  • Reallocation of the EU plastic tax to manufacturers and distributors

Read a November 2021 report [PDF 355 KB] prepared by the KPMG member firm in Germany

Read a more detailed November 2021 report [PDF 133 KB] about the tax proposals, prepared by the KPMG member firm in Germany

 

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