The annual tax law is a hodgepodge of tax regulations that the legislature has to check quickly before the end of the year. The law is similar to the last big bag you pack when you move. Everything that is lying around goes into it. On Friday, the Bundestag passed this year’s annual tax law with the votes of the traffic light coalition. This time, too, there are innovations that only a very small circle of tax law enthusiasts will be enthusiastic about, such as the “change to the tax haven defense law” or the “change to the sales tax implementation regulation”.
However, unlike in previous years, this time it also contains an unusually large number of regulations with far-reaching effects on citizens. There are many tax reliefs, but also a few burdens. Overall, the law results in annual revenue shortfalls for the state budget of around 4.5 billion euros. An overview of the most important points.
real estate appraisal
The “adaptation of the regulations for real estate valuation according to the sixth section of the second part of the valuation law to the real estate valuation regulation of July 14, 2021” is likely to have caused the greatest excitement in connection with the annual tax law. The consequence of this formulation monster: The inheritance and giving away of real estate is likely to become more expensive for many citizens in the coming year. The background: From 2023 the tax value of a property must be reassessed; the valuations should be brought closer to the actual market values. Because real estate prices have risen sharply in many regions and cities, the result should be correspondingly higher valuations – which could then exceed the allowances up to which a property may be inherited tax-free. The adjustment of the real estate valuations goes back to the former Federal Minister of Construction Horst Seehofer (CSU), who in turn had to implement a decision of the Federal Constitutional Court.
In the Finance Committee, the Union faction had also submitted the application to then also increase the allowances for inheritance tax. However, the traffic light could not agree on this; the SPD and the Greens in particular were against it. Federal Finance Minister Christian Lindner (FDP) announced via Twitter that he was convinced that there was a need for action on the allowances for inheritance and gift tax. “As a pure state tax, from which the federal government does not benefit, an initiative for the increase should preferably be taken by the states.”
excess profit tax
Throughout the summer, Lindner vehemently opposed an excess profit tax for energy companies. Now he still has to introduce one, an EU requirement forces him to do so. The directive from Brussels provides for the introduction of an “energy crisis contribution” by companies in the oil, gas, coal and refinery industries. The annual tax law now provides that profits in 2022 and 2023 that are more than 20 percent above the average of previous years will be taxed at 33 percent. The additional tax revenue is likely to be around one billion euros; the electricity price brake is to be co-financed with the money.
When Lindner tweeted on Friday that the annual tax law contained “mainly good news” but also “a few drops of bitterness”, he probably meant the excess profit tax with the latter. His house had previously warned that the EU was forcing Germany onto thin ice in terms of tax law. The financial policy spokeswoman for the Green Group, Katharina Beck, called the regulation an “important sign” of justice and solidarity.
Payment method for federal benefits
When the federal government decided on the first crisis aid this year, it quickly became clear that it would not be that easy for the state to transfer money to its citizens. Roughly speaking, there is still no link between the tax identification number that every citizen has, even babies – and an associated IBAN. Employers therefore had to pay out the energy flat-rate from the spring relief package. This should change in the future, so that the planned climate money can be paid out to the citizens easily and without any problems. In the Annual Tax Act, the legal basis “to set up a direct payment method for public services using the tax identification number” is now being created.
Tax-free photovoltaics
Anyone who has income from the operation of a small photovoltaic system with an output of up to 30 kilowatts – for example on the roof of a family house – no longer has to pay tax on it. The regulation was originally intended to apply from next year, but is now being introduced retrospectively for this year. In addition, starting next year, sales tax will no longer apply when purchasing a small photovoltaic system.
home office
The home office flat rate introduced during the pandemic will be extended with the annual tax law and increased to six euros for each day you work from home. It can be used for up to 210 days in total. There are also reliefs when it comes to the deductibility of the home office.
More tax relief
The so-called savings allowance will be increased from 801 euros to 1,000 euros for singles and from 1,602 euros to 2,000 euros for couples. It is the first increase since the introduction of this capital gains allowance. The employee lump sum for income-related expenses will also increase from 1200 to 1230 euros, more than originally planned, as will the training allowance for adult children, from 924 euros to 1200 euros. The relief amount for single parents also increases by 252 euros. The fact that pension contributions can be fully claimed as special expenses in the tax return from next year is also a regulation from the annual tax law. The basic pension surcharge is tax-free.
Energy price flat rate and December help
The annual tax law regulates that pensioners have to pay tax on their energy price flat rate. In addition, high earners who still pay the solidarity surcharge have to pay tax on the relief provided by the “December Aid” and the electricity and gas price brake.
housing
The special depreciation in rental housing will be extended – at least for the construction of particularly energy-efficient houses and for projects in which the construction costs do not exceed 4800 euros per square meter. Five percent of the production costs could then be tax deductible for four years. The regulation applies to construction projects for which a building application is submitted in the years 2023 to 2026.