New package with bureaucracy relief

A total of 22 measures are intended to free companies and private individuals from unnecessary bureaucratic requirements or at least facilitate their practical application.

In April, the German government adopted a comprehensive package of measures to reduce bureaucracy. It contains a total of 22 specific measures designed to relieve companies and citizens of bureaucratic obstacles. Some points concern very specific regulations for certain industries, but there are also measures that will benefit most businesses and taxpayers. Here is an overview of these "highlights" for which the corresponding legal adjustments are now being drawn up:

• Turnover thresholds: As of January 1, 2021, the turnover limit for actual taxation has been raised to 600,000 euros and thus aligned with the mandatory accounting limit. However, there are still differences in the calculation methods of these limits. By means of a reference in the Tax Code to the calculation according to the Value Added Tax Act, the calculation methods will now be aligned.

• Binding information: In the future, taxpayers should be able to obtain binding information on tax matters within three months. In this context, it is to be examined whether the responsibility for binding information in connection with fiscal unities should be centralized with the tax authority responsible for the parent company.

• Timely operational audits: By making greater use of cooperative tax audits, tax authorities should in future conduct tax audits in a timely manner, more quickly and with the least possible effort for all parties involved.

  

• ESt4B communications: Although partnerships have been required to submit tax returns exclusively electronically to the tax office since 2011, their income has so far been determined automatically by the tax office responsible for the partnership and then sent in paper form to the tax offices responsible for taxing the partners with so-called ESt4B notices. These tax offices then record the proportional income manually in their own IT system and determine the income tax. This time-consuming and error-prone exchange of information affects more than 5 million tax cases annually throughout Germany and is therefore now to be converted to an electronic procedure.

• Sales tax fiscal unity: The VAT fiscal unity regulation is repeatedly the subject of supreme court rulings. For this reason, a procedure is to be introduced by means of which a fiscal unity can, if possible, only come into existence upon application and through a corresponding confirmation by the tax authorities that the legal criteria have been met.

• VAT number query: Up to now, it has only been possible to query domestic VAT identification numbers (UStIdNr.) with qualified confirmation by the Federal Central Tax Office (BZSt) using an application form at the BZSt. The federal government intends to examine a simplified query option together with the states and decide on it before the end of the first half of 2021.

• Business Register: A basic register for company master data in conjunction with a uniform national business number should lead to a reduction in statistical obligations. In order for the corresponding preparatory work to begin, the "Act on the Creation of a Basic Register for Business Master Data" is to be passed before the Bundestag elections. Following a trial phase, the first expansion stage of the basic register is to be ready for operation from 2024.

• Status determination procedure: The status determination procedure for the self-employed is to be made faster and simpler through digitization and run without contradiction between the different branches of social insurance.

• Uniform U1/U2 rates: The U1 and U2 pay-as-you-go systems cushion the financial burden on employers arising from the continued payment of wages in the event of illness or maternity of their employees. Up to now, the contribution rates have been set individually for each health insurance fund, depending on which risks the individual health insurance funds have to cover. The contribution rate for the employer is therefore based on the health insurance fund with which the employee is insured. As a result, the current procedure leads to a different cost burden for small employers for similar benefits. It will therefore be examined to what extent the legal framework can be further developed in such a way that the contribution and reimbursement rates are standardized. In addition, the extent to which improvements are necessary to ensure quality-assured information from the health insurance funds to employers on social security issues will be examined together with the health insurance funds.

• Photovoltaic systems: Bureaucracy also stands in the way of the expansion of renewable energies. The regulations for the construction and operation of small plants are therefore to be made as simple as possible. In the future, small photovoltaic plants will no longer be required to file a business tax return.

• Award procedure: Companies that have not been on the market for long often find it difficult to participate successfully in award procedures. One possible reason for this is the practice of some contracting authorities to rely solely on experienced companies with relevant reference projects, contrary to the legal possibilities and requirements. In order to strengthen the participation of young companies in award procedures, efforts should be made to ensure that contracting authorities do not impose requirements that are not justified by the subject matter of the contract. This applies in particular to the requirement of several years of experience and numerous reference projects.

• Company transfers: In order to increase the attractiveness of business successions for those interested in setting up a company, the existing regulatory framework for business transfers or successions is to be simplified.