Draft Annual Tax Act 2023

In mid-July, the Federal Ministry of Finance published the draft of the JStG 2023. The “Act to Strengthen Growth Opportunities, Investment and Innovation as well as Tax Simplification and Tax Fairness” – in short: Growth Opportunities Act – is intended to create the tax framework to increase growth opportunities as a result of multiple crises and far-reaching challenges facing the German economy. The international competitiveness of Germany as a business location is also to be strengthened.

Overview of the most important measures

  • Expenses for gifts to persons who are not employees of the taxpayer: EUR 50 instead of previously EUR 35 deductible.
  • Expenses for company events: EUR 150 instead of previously EUR 110 per employee and event (max. 2 per year) deductible.
  • Improvement of the tax loss deduction, i.e. abolition of the loss carryforward restriction for the years 2024 to 2027 and increase of the unlimited loss carryforward from EUR 1 million to EUR 10 million as of the calendar year 2028
  • More liquidity for small and medium-sized enterprises through improvements to immediate depreciation of low-value assets(GWG limit increased to EUR 1,000), depreciation options for collective items and special depreciation in accordance with Section 7g of the German Income Tax Act (50 % instead of 20 %, § 7g para. 5 EStG-E).
  • Raising the limit for the accounting obligation of certain taxpayers (Section 141 of the Tax Code) and the limit for actual taxation for VAT purposes (possibility of calculating the tax on the basis of received instead of agreed consideration) in accordance with Section 20 sentence 1 number 1 of the VAT Act.
  • Introduction of an exemption limit of EUR 1,000 for income from renting and leasing.
  • Increase the threshold for exemption from filing quarterly advance VAT returns from EUR 1 000 to EUR 2 000.
  • The obligation to notify cross-border tax arrangements is extended to domestic tax arrangements.
  • Introduction of a legal regulation for the mandatory use of electronic invoices between domestic companies.
  • Reform of the interest rate cap and introduction of an interest rate cap.
  • Adjustment of the taxation of pensions from the basic pension scheme.

If you have any questions about specific topics, please feel free to contact us! We will be happy to support you in implementing and taking into account the innovations that the JStG 2023 will bring with it from next year.

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