The Federal Cabinet approved the Annual Tax Act 2024 (JStG 2024) on 5 June 2024. Similar to the 17 May 2024 proposal, it includes numerous amendments across various tax laws.
The draft will now go to the German Federal Council (Bundesrat) for comments before being submitted to the German Federal Parliament (Bundestag). The legislative process is expected to conclude in the fourth quarter of 2024. Further changes can potentially be introduced during this time.
Amendments to the Annual Tax Act 2024 include:
Income Tax Act (ESTG)
- Expansion of Section 19a to include share transfers within group companies, which retroactively enters into force from 1 January 2024.
- Implementation of the Constitutional Court decision on book value transfers between partnerships.
- Revisions to regulations on hidden reserves disclosure due to tax rights changes.
Corporate Income Tax Act (KSTG)
- Removal of the need for an additional procedure to determine unpaid contributions to nominal capital.
Trade Tax Act (GEWSTG)
- Amendment to Section 7, treating all passive foreign permanent establishment income as domestic.
Real Estate Transfer Tax Act (GRESTG)
- New rule on property allocation for real estate transfer tax purposes to prevent double allocation.
Investment Tax Act (INVSTG)
- Extension of the winding-up period for investment funds from five to 10 years.
- Inclusion of all capital gains in distribution-equivalent income, excluding gains from cryptocurrencies.
Reorganisation Tax Act (UMWSTG)
- Requirement for electronic transmission of the final tax balance sheet within 14 months of the tax period’s end.
- Book value recognition at shareholder level without application; fair market value recognition upon application.
