Federal government decides to grant retroactive tax relief

Against the backdrop of sharply rising energy prices, the coalition committee has agreed on several relief steps that will now be launched.

Due to the already sharp rise in prices for electricity, gas and petroleum products and an expected further aggravation due to the Russian invasion of Ukraine, the governing parties agreed on February 23, 2022 on several short-term relief measures for citizens. Among the total of ten measures are items that had already been agreed weeks or even months earlier, but new in particular are some tax measures retroactive to the beginning of the year, which are now to be implemented at short notice. In addition, there is the early abolition of the EEG surcharge.

• Employee Lump Sum: The employee allowance is to be increased by 200 euros to 1,200 euros. This increased allowance will apply retroactively from January 1, 2022.

• Basic allowance: At the beginning of the year, an increase in the basic tax allowance by 240 euros to 9,984 euros, which was already enshrined in law two years ago, had already come into force. This increase is now to be increased retroactively by a further 363 euros. The basic tax-free amount for 2022 would then be 10,347 euros. Whether this will also apply to the deduction of maintenance payments, as has been the case with previous increases in the basic allowance, is a matter for the coalition to clarify in the further legislative process.

• Long-distance commuter allowance: In view of the increased prices for mobility, the increase in the flat rate for long-distance commuters from the 21st kilometer and the mobility premium, which is due on January 1, 2024, will be brought forward. It will thus be 38 cents instead of 35 cents, with retroactive effect from January 1, 2022. The Greens objected to an increase to up to 45 cents. The coalition committee also made it clear that the government is aiming to reorganize the commuter allowance from an environmental and social perspective before the end of this legislative period.

  

• EEG levy: In view of the rise in electricity prices, the levy under the Renewable Energy Sources Act (EEG) is to be abolished as early as July 1, 2022. The coalition is linking this to the expectation that electricity suppliers will pass on the full relief of 3.723 ct/kWh to end consumers. Grid operators will therefore be required to recalculate the EEG surcharge during the year in light of changes in the underlying conditions. The exemptions linked to the EEG surcharge will be reviewed and adjusted with effect from January 1, 2023, as will the exemptions from energy taxes and compensation rules.