Annual Tax Act 2024
On May 17, 2024, the Federal Ministry of Finance presented a 243-page draft of the Annual Tax Act 2024. The draft, consisting of 44 articles, includes proposed amendments to the Income Tax Act, Corporate Tax Act, Trade Tax Act, Value-Added Tax Act (VAT), Transformation Tax Act, Fiscal Code, and various implementing regulations.
Income Tax
One positive aspect is the planned expansion of the tax exemption for small photovoltaic systems (§ 3 No. 72 EStG-new). The allowable gross output is set to increase from 15 kW (peak) to 30 kW (peak) per residential or commercial unit for installations on buildings other than single-family homes, similar to what is already allowed for single-family homes. It is also clarified that these power limits are exemptions and not tax allowances. Additionally, a new exemption for tax-free bonus payments from health insurance funds will be introduced. Bonus benefits provided based on § 65a SGB V will no longer count as a reimbursement of contributions, up to an amount of €150.00 per taxpayer and contribution year. For employees, a notable change is the planned flat-rate taxation for mobility budgets. If this legislative proposal is implemented (§ 40 Abs. 2 No. 8 EStG-new), the current flat-rate taxation regulations could be extended to cover additional transportation options, such as e-scooters, car-sharing, etc.
Value-Added Tax (VAT)
Among the many planned changes to VAT regulations, the revision of § 15 Abs. 1 Sentence 1 No. 1 of the Value-Added Tax Act (UStG) is particularly noteworthy. Starting in 2026, the input tax deduction for recipients of services from a "cash-basis taxpayer" (who reports and pays VAT only in the calendar month when the invoice amount is actually received – § 20 UStG) will only be possible once a payment for the corresponding service has been made. At the same time, a new invoice labeling requirement for "taxation based on received payments" will be introduced for cash-basis taxpayers (new § 14 Abs. 4 Sentence 1 No. 6a UStG).