On 10 September 2019, the Finance Minister presented the Government’s draft Budget for 2020 to the lower house of parliament (the Bundestag). The draft budget includes following measures:
Currently, the solidarity tax is a 5.5% surtax on both corporate and individual income. The draft budget proposed reducing the scope of the solidarity tax so that around 90% of individual taxpayers are no longer required to pay the levy.
In addition, the budget proposed new incentives for expenditure on research and development activities. Following the government’s previous announcement on these proposals, the main points of the draft research and development law include an allowance equal to 25% of the tax base, which is subject to a EUR2m (USD2.2m) ceiling. This means that the allowance will be limited to EUR 500,000 per assessment year.
The Minister of Finance also referred on several references to the need for stricter rules to combat tax avoidance and confirmed that Germany will implement the European Union’s Directive on the obligation of intermediaries to report tax planning systems.
