New status with ongoing legislative changes

While the Bundesrat has been dealing with various tax amendment bills, the Federal Ministry of Finance has presented the long-awaited draft amendment to the Inheritance Tax Act.

In addition to the "Act to Implement the Protocol Declaration on the Act to Adapt the Fiscal Code to the Union Customs Code and to Amend Other Tax Regulations", the Bundesrat discussed several other tax amendment acts in May and in some cases expressed requests for amendments. However, the Bundestag still has to give its approval for these amendments to be included in the final law. In detail, the Bundesrat passed the following resolutions:

• Electric cars: Hesse would like to promote electric vehicles for tax purposes. The draft bill therefore provides for a special depreciation allowance for electric vehicles and charging devices in the business sector, among other things. Lower Saxony, on the other hand, has proposed an environmental bonus to be paid to private individuals when they purchase a new car. A purchase subsidy of 5,000 euros is planned for purely electric vehicles. Low-consumption plug-in hybrid vehicles are to be subsidized with a grant of 2,500 euros.

  

• Car toll and vehicle tax: Following the Bundestag, the Bundesrat has now also given the green light for the introduction of the car toll and the reduction in vehicle tax for domestic vehicle owners. However, the last word has not yet been spoken, as the EU Commission has already announced a legal challenge. If this is successful, German drivers will have to forego the reduction in vehicle tax and thus pay the same amount for the car toll as visitors from abroad.

• Reduced bureaucracy: The Federal Council is proposing an amendment to the Bureaucracy Relief Act that would increase the limit for small-value invoices from EUR 150 to EUR 300. In addition, the Federal Council is also proposing that the obligation to provide information on the deduction of church tax on capital income be made more specific and that this should no longer take place annually, but only once at the beginning of the business relationship.

• Basic and child allowance: In principle, the Federal Council has agreed to the constitutionally necessary increase in the basic allowance, child allowance and child benefit. However, it would also like the deduction for maintenance obligations to be increased to the new, higher basic allowance.

• Single parents: In line with the decision of the coalition leaders, the Bundesrat is in favor of increasing the relief amount for single parents by 600 euros to 1,908 euros. In addition, the relief amount should be staggered according to the number of children and increased by 240 euros for each additional child.

• Bank failures: Deposit protection in the event of bank insolvency will be extended in accordance with EU requirements. As before, deposits up to a limit of 100,000 euros remain guaranteed. However, the payout period for compensation will be reduced from 20 to 7 working days. In addition, deposits up to 500,000 euros that are particularly worthy of protection will be covered in future.

The Federal Ministry of Finance has not remained idle when it comes to changes to tax law. Back in March, the ministry wanted to present a draft for the revision of inheritance tax on business assets, but then postponed this project due to fierce criticism. The ministry has now published the draft bill for the amendment law. There have been two main changes compared to the previously published plans:

• Payroll regulation: There will only be a general exception to the payroll regulation for up to three employees. For up to ten employees, there is at least some relief in that a reduced wage bill is required. However, the employees of several companies will be added together in order to prevent arrangements.

• Needs Assessment: In the case of business assets in excess of EUR 20 million, the heir can also apply for a graduated exemption discount based on the amount of business assets instead of a needs test, in which all assets must be disclosed.

As there is still criticism of the Ministry's plans, it cannot be ruled out that significant changes will be made in the further legislative process. You will find detailed information on the current plans for inheritance tax in the next issue of the newsletter.