Germany

Since its formation in May 2025, the new federal government has taken several legislative measures including tax measures to stimulate economic growth, strengthen the attractiveness of Germany as a business location and tackle the issue of ongoing economic weakness. Further and on a more technical level, Germany continues to implement international provisions in tax law (e.g. those made by the EU and OECD). Many of those measures have already been enacted into law.

In relation to the ongoing year, on May 26, 2026, the Federal Ministry of Finance published a draft bill for the so-called Annual tax law 2026 (”Jahressteuergesetz 2026”), which is intended to implement changes to various areas of German tax law. It includes, among other things, a rule on the allocation of the total purchase price for a developed property into buildings and land, minor changes in withholding taxation (inter alia more generous regulations for WHT on royalties), an increase of the interest rate on corporate and trade tax refunds and additional tax assessments and new regulations on VAT groups. Furthermore, the draft bill contains changes of the Minimum Tax Act to implement the OECD side-by-side package (i.e. the side-by-side-Safe Harbour and the UPE-Safe Harbour).

The Second Act on the Reduction of Energy Tax (“2. Energiesteuersenkungsgesetz”) aims to mitigate the short-term adverse economic effects of the Iran war and therefore reduces the excise tax on fuel in May and June 2026.

Moreover, the Ninth Act Amending Provisions of the Tax Advisory Law and Tax Law (”Neuntes Gesetz zur Änderung von Vorschriften im Steuerberatungsrecht sowie im Steuerrecht) provides for an increase in the minimum municipal trade tax rate. Next to this, it contains changes in the taxation of Share Deals with RETT as well as a permanent extension of a RETT exemption that would otherwise expire at the end of the year.

In addition, in May 2026, the Act Amending the Consent Act for the MLI (“Gesetz zur Änderung des Gesetzes zu dem Mehrseitigen Übereinkommen vom 24. November 2016 zur Umsetzung steuerabkommensbezogener Maßnahmen zur Verhinderung der Gewinnverkürzung und Gewinnverlagerung”) entered into force. This Act is intended to swiftly and uniformly align additional German DTTs with the OECD/G20 BEPS minimum standard by expanding the list of DTTs affected by the MLI. However, the concrete changes in the DTTs will need to be included in further legislation, for which no draft is yet available.

Furthermore, the Act on the Promotion of Private Investment and the Financial Sector (“Gesetz zur Förderung privater Investitionen und des Finanzstandorts”), was enacted in February 2026. This Act has increased the maximum amount for the transfer of hidden reserves from the sale of shares in corporations to reinvestments from currently EUR 500,000 to EUR 2,000,000 (so-called roll-over relief).