Germany

On 5 June 2024, the Federal Cabinet produced a draft bill for the so-called Finance Act 2024 (Jahressteuergesetz 2024), which is intended to implement changes to various areas of German tax law. The focus is on technical adjustments as required by European Union (EU) law and case law. Further follow-up amendments to previous legislative changes are also envisaged.  

In May 2024, the legislative process for a law to modernise and reduce bureaucracy in energy and electricity taxes (Gesetz zur Modernisierung und zum Bürokratieabbau im Strom- und Energiesteuerrecht) was initiated. Among other things, the respective laws are to be updated with regard to electromobility.

In June 2024, a so-called Multilateral Instrument (MLI) ’Implementation Act‘ modifying nine German double taxation treaties (DTTs) according to the MLI passed through their parliamentary procedures.

In March 2024, after a tough mediation process between the German Federal Parliament (Bundestag) and the German Federal Council (Bundesrat), the legislative process for the main tax act of 2023, the so-called Growth Opportunities Act (Wachstumschancengesetz), was at last finalised. However, the broad tax incentives for investments in climate protection, which were part of the first draft bill introduced by the Bundestag in November 2023, have been removed from the final statute. Among other things, the Act includes changes to the treatment of net operating losses, a temporary reintroduction of extended depreciation rates for movable assets, and new regulations restricting the deductibility of interest from cross-border financing relationships. The amendments to the interest limitation rule and real estate transfer taxation were transferred into the so-called Secondary Credit Market Promotion Act (Kreditzweitmarktförderungsgesetz), which was passed by the Bundestag and Bundesrat back in December 2023.

Another major change was the finalisation in December 2023 of the legislative process to implement Directive (EU) 2022/2523 on ensuring a global minimum level of taxation (Pillar Two) (Mindestbesteuerungsrichtlinie-Umsetzungsgesetz). The national legislation closely follows the Organisation for Economic Co-operation and Development (OECD) Model Rules and the EU Directive and provides for an application of the so-called Income Inclusion Rule and Qualified Domestic Top-Up Tax for the first time for financial years beginning after 30 December 2023. The regulations on the Undertaxed Profits Rule apply to financial years beginning on or after 30 December 2024.

In addition, in November 2023, the legislative process for the Act on the Financing of Investments to Secure the Future (Zukunftsfinanzierungsgesetz) was finalised. In addition to adjustments to financial market law and the further development of company law, the Act also included changes to income tax and value-added tax (VAT), which entered into force on 1 January 2024.