Germany: Tax policy consequences from end of governing coalition
Passage of certain bills will require opposition support, which remains uncertain
The German government on November 6, 2024, saw the breakup of its coalition, leading to the dismissal of Federal Finance Minister and two other federal ministers requesting dismissal.
The Chancellor announced plans to seek a vote of confidence in the Bundestag on January 15, 2024. If the vote fails, new elections are expected in March 2025, though these dates could change based on further negotiations. Until the vote, the Chancellor intends to govern with a minority government, pushing for votes on urgent bills, including tax policy measures such as the compensation of “cold progression” starting January 1, 2025, and immediate industry measures, likely part of the draft Tax Development Act.
The passage of these bills will require opposition support, which remains uncertain. The opposition leader of the Christian Democratic Union (CDU) has conditioned talks on these bills on an earlier vote of confidence.
The Annual Tax Act 2024, passed by the Bundestag on October 18, 2024, is not directly affected by the coalition's end but still requires Bundesrat approval, expected on November 22, 2024.
Read a November 2024 report prepared by the KPMG member firm in Germany