Germany: Draft bill for Annual Tax Act 2024 published, includes Pillar Two changes; other tax developments
Recent tax developments in Germany
June 28, 2024
The Federal Ministry of Finance (BMF) published the government draft for an Annual Tax Act 2024.
Businesses received an unofficial version of the draft bill earlier this year. Read TaxNewsFlash
The draft bill contains a large number of predominantly technical measures, including proposals relating to:
- Restructuring and reorganizations
- Transfers between “sister partnerships”
- Deferred taxation of hidden reserves in case of exit taxation (so-called balancing item method of Section 4g Income Tax Act)
- Closing balance sheet of the transferring entity
- Taxation of the shareholders of the transferring corporation
- Trade tax liability
- Withdrawals from a partnership in the tax retroactive period in case of contributions to a corporation
- Retroactive taxation of “contribution gain II” in case of an exchange of shares
- Tax-specific capital contribution surplus account
- International taxation
- Trade tax in the case of controlled foreign company (CFC) rules
- Minimum Tax Act (implementation of the OECD July 2023 administrative guidance on the Pillar Two rules)
- Procedural law
- FATCA reporting obligations
- Financial account information exchange
- Further measures
- Tax exemption for photovoltaic systems
- Real estate transfer tax
The publication of the ministerial draft bill will be followed by the parliamentary procedure in the lower house of Parliament (Bundestag) and the upper house of Parliament (Bundesrat). Significant changes may still arise in the further course of the legislative process.
Read a July 2024 report prepared by the KPMG member firm in Germany
Other recent tax developments in Germany include:
- The Federal Ministry of Finance (BMF) on June 14, 2024, published guidance on guidance on application of the Act Combating Tax Avoidance and Unfair Tax Competition.
- The BMF on June 4, 2024, published an extended so-called non-objection regulation to Section 12 of the Act to Combat Tax Havens (StAbwG).
- The BMF on June 18, 2024, extended the deadline for submitting CFC declarations for 2022 to October 31, 2024, and on June 25, 2024, published the related declaration and reporting forms.