Germany: Updated list of non-cooperative tax jurisdictions, consultation on draft amendments to Pillar Two rules, changes to transfer pricing rules, other tax developments

Recent tax developments in Germany

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January 30, 2025

The third amendment to the Tax Haven Defense Regulation—which reflects the current EU list of non-cooperative tax jurisdictions last updated on October 8, 2024 (read TaxNewsFlash)—was promulgated in the Federal Law Gazette on December 30, 2024.

The Tax Development Act was also promulgated in the Federal Law Gazette on December 30, 2024. The law—which adjusts income tax rates for the 2025 and 2026 assessment periods—did not implement various investment incentives that were originally included in the draft law, including:

  • Continuation of declining balance depreciation for movable fixed assets acquired or manufactured from 2025 to 2028 and increase to 2.5 times the linear depreciation, up to a maximum of 25%
  • Reform of collective depreciation to raise the lower value limit for preferential assets, which can be combined in a collective item, to €800 and the upper value limit to €5,000, as well as shortening the depreciation period of the collective item to three years
  • Increase of the maximum assessment basis for purposes of research allowance to €12 million

Read a January / February 2025 report prepared by the KPMG member firm in Germany

Other recent tax developments in Germany include:

  • The government published a draft bill of Second Act on the Financing of Future-Securing Investments, which aims to improve financing options for start-up companies.
  • The Federal Ministry of Finance (BMF) on December 6, 2024, launched a consultation on a revised draft law proposing amendments to Minimum Tax Act, which would implement the OECD's new administrative guidelines on the global minimum tax.
  • The Lower Tax Court of Düsseldorf commented on two issues under the German controlled foreign corporation (CFC) rules—functional approach and violation of the free movement of capital in third-country cases (August 2, 2024, decision – 1 K 2666/19 F).
  • The BMF on December 5, 2024, provided final guidance on the application of the anti-hybrids rules.
  • The BMF on December 20, 2024, provided guidance on the motive test under the prior version of the German CFC rules. 
  • The BMF on December 12, 2024, published the final administrative principles on transfer pricing 2024, which include significant changes to the rules regarding intra-group financing.

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