On 30 August 2023, the German government released a revised version of the Growth Opportunities Act, originally proposed by the German Ministry of Finance in mid-July. This release marks the commencement of the formal legislative procedure with potential completion by the end of 2023. The bill provides for the following important direct tax measures:

• The interest deduction limitation rule has been tightened to make the group escape unavailable to taxpayers with any affiliated party or foreign permanent establishment. The €3 million net interest threshold remains, but can only be claimed once per group of related businesses and must be allocated proportionally to each entity based on net interest expenses. This means that taxpayers who are part of a group of related businesses will now have to share the €3 million net interest threshold, even if they are not all part of the same legal entity.
• The German government has passed a law that will extend the loss carryback period to three years and permanently maintain the increased loss carryback amounts of EUR 10 million for single taxpayers and EUR 20 million for married couples assessed jointly. The law will also temporarily increase the percentage of loss carryforward that can be deducted without limitation from 60% to 80% for the assessment periods 2024 to 2027. In other words, businesses that incur losses in 2023 will be able to carry those losses back to the 2020, 2021, and 2022 tax years, and deduct them from their taxable income in those years. Businesses can also carry forward losses to future tax years, but the amount of loss that can be deducted each year is limited. Under the new law, businesses will be able to deduct up to 80% of their loss carryforward without limitation for the tax years 2024 to 2027.