Germany: Draft legislation for 2022 Annual Tax Act
Proposals relating to digitalization, procedural simplification, legal certainty and tax equality
Draft legislation for 2022 Annual Tax Act
The Federal Ministry of Finance (BMF) published draft legislation for the 2022 Annual Tax Act (Jahressteuergesetz 2022 – JStG 2022), which includes proposals relating to digitalization, procedural simplification, legal certainty and tax equality, as well as implementation of the coalition agreement and adaption to EU law, Court of Justice of the European Union (CJEU) case law, and judgements of the German Federal Fiscal Court.
In particular, the draft legislation includes the following proposals:
- Amended treatment of so-called “register cases” (i.e., limited tax liability/non-resident tax status pursuant to Section 49 EStG for licence payments and sales transactions from rights between non-resident taxpayers due to domestic registration in Germany)
- Increase in straight-line depreciation rate for new residential buildings to 3% (from 2%, or 2.5% for buildings completed before 1 January 1925 at 2.5%)—effective for residential buildings held as private and business assets completed after 30 June 2023
- Income tax exemption for income from the operation of certain photovoltaic systems—effective 1 January 2023
- Zero value added tax (VAT) rate for the supply, import, intra-community purchase and installation of photovoltaic systems, including energy storage units—effective 1 January 2023
- Obligations for payment service providers for cross-border payments to implement EU Council Directive 2020/284 and intended to combat VAT fraud, particularly in the area of cross-border electronic commerce—effective 1 January 2024
Next steps
The draft legislation will be forwarded to the upper house of the German parliament (Bundesrat) for consideration and then to the lower house of the German parliament (Bundestag) for consideration. Thus, it is possible that amendments to the draft legislation will be made.
Read an October 2022 report [PDF 259 KB] prepared by the KPMG member firm in Germany
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