New bureaucracy relief law passed

Unlike its predecessor, the Second Bureaucracy Relief Act contains several measures that affect almost all companies.

Superfluous bureaucracy means unnecessary expense for all companies, but disproportionately burdens small and medium-sized enterprises. Two years ago, the first Bureaucracy Relief Act cleared out and simplified tax and business law in various places. Although the changes at the time were welcome, they only resulted in truly noticeable relief in a few cases, as only a smaller number of entrepreneurs were able to benefit from the relief in each case.

The situation is different with the Second Bureaucracy Relief Act: The measures it contains have a much broader impact than those of the first law, because almost every entrepreneur and freelancer can benefit from at least one of the measures. According to the first draft, the law was to save German business a total of more than 350 million euros in bureaucratic costs. Since this amount was calculated, several additional measures have been included in the law, so that the relief is now even higher.

Originally, the legislative process initiated last summer was supposed to be completed within a few months. In the end, it took six months longer than planned, but now the Bundestag and Bundesrat have passed the law. Most of the measures it contains will now enter into force retroactively as of January 1, 2017. And these are the measures included in the law:

• Delivery bills: Delivery bills must be kept as commercial or business letters, even if the information is derived from the invoices. Delivery bills must be kept for at least six years, and even for ten years if they are used as accounting documents. Because an invoice must always contain information on the quantity and type of goods delivered anyway and there is no legal obligation to create delivery bills, the obligation to retain delivery bills has now been largely eliminated. For received delivery bills, the retention period now ends with the receipt of the invoice, and for dispatched delivery bills, with the dispatch of the invoice. The only exceptions are delivery bills that are also used as accounting documents - these must be retained as before. The shortened retention period applies to all delivery bills whose retention period has not yet expired under the old regulation. Since this regulation came into force retroactively as of January 1, 2017, all delivery bills that do not serve as accounting documents or must be retained due to other regulations can thus be disposed of.

• Small-value invoices: Invoices for small amounts up to 150 euros do not have to contain all the mandatory information for an invoice. The date, the address of the issuer of the invoice, the list of goods or services and the invoice amount as well as the VAT rate or tax amount are sufficient. The previous limit of 150 euros has now been raised retroactively to 250 euros as of January 1, 2017. There was initially resistance to the increase to 250 euros, and so the first draft only provided for an increase to 200 euros. In the final law, however, the increase to 250 euros prevailed, which had already been discussed two years ago.

• GWG limit: Low-value assets that are fully depreciated immediately must be recorded in an ongoing list from a value of 150 euros, stating the date of acquisition, production or contribution and the acquisition or production costs, unless this information can already be derived from the accounting records. This value limit will be increased to 250 euros from 2018. The Bureaucracy Relief Act does not change the limit of 410 euros up to which assets can be fully depreciated immediately. Although the GWG limit will also be raised to 800 euros from 2018, this change is contained in a different law that has yet to be approved by the Bundesrat.

• Payroll tax filing: An employer who pays no more than 4,000 euros in payroll tax to the tax office per year only has to submit the payroll tax return once a quarter instead of every month. From 2017, an annual limit of 5,000 euros will now apply, so that in future micro-enterprises will only have to submit four instead of twelve declarations per year. The limit for the annual submission of the wage tax return was already raised from 1,000 to 1,080 euros a few years ago.

  

• Flat-rate payroll tax: The flat-rate wage tax for short-term employment is only permitted if the average daily wage is below a certain limit. This limit will increase from 68 euros to 72 euros from 2017, which is intended to compensate for the increase in the statutory minimum wage to 8.84 euros as of January 1, 2017.

• SV contributions: If the final salary is not yet known when the social security contributions are due, the estimated amount of the contributions previously had to be estimated and paid. The difference between the estimate and the final amount must then be included in the following month. In the future, the simplified procedure will be open to all employers. The contributions of the previous month will simply be taken as a basis and the difference will be settled in the following month as before. This means that a time-consuming estimate is no longer necessary.

• Factoring: In the case of genuine factoring, an exclusion of liability on the part of the factor for VAT has now been enshrined in law. The Federal Fiscal Court (Bundesfinanzhof) had not excluded the factor's liability if it provided the entrepreneur with liquid funds from which the entrepreneur could have settled its VAT debt. This ruling contradicted the administrative opinion.

• Small business regulation: An originally planned increase in the turnover limit for small businesses did not make it into the final law. It therefore remains the case that an entrepreneur only does not have to report and pay VAT if the turnover in the previous year did not exceed 17,500 euros and is not expected to exceed 50,000 euros in the current year. In return, those who make use of the small business regulation are not allowed to claim an input tax deduction. Although the small business limit has not been raised for some time, it is not expected to be raised in the foreseeable future, as the business associations have also signaled their clear rejection of the increase during the legislative process.

• Long-term care insurance: For the billing of care services within the framework of long-term care insurance, the details for completely electronic billing including confirmation of service provision by the service recipient are to be defined by 2018. Paper receipts will then be superfluous.

• Chambers of Crafts: The chambers of skilled crafts are given a clear legal basis for communicating with their members electronically. To this end, they can now also request the website and e-mail address of their members and include them in the register of skilled crafts.

• Handicraft regulations: Various other changes will be made to the Crafts Code, for example to the issuance of the European Professional Card and the publication of notices in digital media.

• Performance Information: In the future, a central federal editorial office is to provide performance information in standardized form on federal laws and regulations that give rise to performance. Performance information is to be produced in particular for regulations relevant to companies and citizens, where a high demand for information is to be expected.