Draft for the Bureaucracy Relief Act IV

The government draft for the Bureaucracy Relief Act IV is available, which, among other measures, is intended to shorten retention periods and ease VAT obligations.

In their coalition agreement, the governing parties had agreed to present a law to reduce bureaucracy. In mid-March, the federal government passed the government draft for the Bureaucracy Reduction Act IV (BEG IV), which is now being passed on to the parliaments.

The BEG IV is part of the bureaucracy reduction package agreed by the cabinet at its closed meeting in Meseberg in August 2023. In addition to the BEG IV, this package includes the Growth Opportunities Act, which has since been passed, the increase in thresholds for determining company size categories, a joint initiative with France to reduce bureaucracy at EU level and a collective regulation to reduce bureaucracy at ordinance level.

Together, these measures are expected to reduce the burden on the economy by over 3 billion euros per year. The BEG IV will contribute around 944 million euros per year. Here is an overview of the main changes brought about by BEG IV, with the majority of the relief volume being accounted for by the first four changes.

• Retention periods: The retention periods under commercial and tax law for accounting documents (copies of invoices, bank statements, wage and salary lists, etc.) are to be reduced from ten to eight years. This change will take place in parallel in the German Commercial Code, the German Fiscal Code and the German Value Added Tax Act and will apply to all documents whose retention period has not yet expired when BEG IV comes into force.

  

• Power of attorney database: A central power of attorney database is to be set up in which tax advisors will be able to store general powers of attorney for social insurance from 2028. This means that employers will no longer have to issue numerous individual powers of attorney to their tax advisors for the various social security institutions. Instead, an electronic general power of attorney will suffice in future, which all social security institutions will then be able to access in the power of attorney database.

• Hotel registration obligation: The hotel registration requirement for German nationals will be abolished. However, the obligation to register remains in place for nationals of other countries due to mandatory EU requirements.

• Written form requirements: In the German Civil Code (BGB), written form requirements are to be downgraded to text form requirements in many places. Unlike the written form, the text form does not require a handwritten signature. This means that an email, text message or messenger message is also sufficient for a corresponding declaration. Similar downgrades are also planned in association law, company law and other laws. For example, association members will be able to declare their consent to a resolution passed without a general meeting in text form in future. GmbH shareholders should also be able to cast their vote on resolutions outside of a meeting in text form if all shareholders agree.

• Advance VAT returns: An advance VAT return must be submitted monthly if the VAT to be paid amounted to more than EUR 7,500 in the previous calendar year. If the VAT to be paid was below this threshold, a quarterly advance return is sufficient instead. The threshold for the quarterly advance return has now been raised to EUR 9,000.

• differential taxation: Differential taxation allows a reseller to determine the assessment basis for VAT in a simplified manner by calculating the total difference between all purchases and sales made within a tax period, provided the purchase price does not exceed a certain amount. This amount for the purchase price has remained unchanged at EUR 500 since 2002 and is now to be increased to EUR 750.

• Certificates of exemption: The period of validity of exemption certificates for capital gains tax and withholding tax for limited taxpayers will be extended from three to five years.

• Service charge settlement: In future, landlords will also be able to make receipts for utility bills available for inspection digitally.

• Job reference: The exclusion of the electronic form for the issuing of references relating to an employment relationship and its duration will be lifted. In future, it should also be possible to issue employment references in electronic form with the employee's consent

• Display obligations: In future, the employer can also fulfill notice obligations under the Working Hours Act and the Youth Employment Protection Act by making the required information available electronically via the information and communication technology commonly used in the company or office - such as the intranet - provided that all employees have free access to the information.

• Parental leave: The written form requirement for applications for a reduction in working hours and their rejection as well as the assertion of parental leave entitlements is to be replaced by text form.

• Public auctions: The options for holding public auctions are to be expanded. In future, they will also be able to take place online via live stream or in hybrid form.

• Passenger handling: Passenger check-in can also be carried out digitally in future. In future, certain data can be read from the passport with the express consent of the traveler.

• Public participation: The comment period for public participation in approval procedures with an environmental impact assessment, in which renewed public participation is required due to changes to the project, is to be shortened appropriately.

• Basic pension: The spot checks on income from capital assets for basic pensions will be abolished after the assumption that these spot checks were necessary was not confirmed.