The German Federal Cabinet approved the draft Jahressteuergesetz 2026 on 12 August 2026, which implements the OECD Inclusive Framework's Side-by-Side Package and now moves to the Bundestag and Bundesrat for further legislative approval.
Germany’s Federal Cabinet released a press release on 12 August 2026 announcing the adoption of the draft Annual Tax Act 2026 (Jahressteuergesetz 2026) on 12 August 2026, proposing a broad package of changes to German tax rules.
Among its key measures is the implementation of the OECD Inclusive Framework’s Side-by-Side Package, which would amend Germany’s Minimum Tax Act to accommodate qualified domestic minimum top-up tax regimes and other agreed simplifications under the global minimum tax framework. The draft also proposes changes affecting capital gains relief for major shareholders, withholding tax on licensing payments, electronic tax notifications, platform reporting, tax interest rates, research and development allowances, and VAT groups.
The draft will now proceed through the legislative process, requiring approval by the parliament (Bundestag) and the Federal Council (Bundesrat).
The main measures of the draft Annual Tax Act 2026 are:
Stricter capital gains handling and simpler licensing costs
The government is tightening how it handles large shareholders seeking capital gains relief. Anyone holding at least 10% of a German company and claiming limited tax liability—think foreign investors—can no longer get advance exemption certificates. Instead, they’ll file for refunds after each transaction. This shift to case-by-case review is designed to catch abusive tax avoidance schemes before they settle.
On the relief side, the license payment allowance jumps from EUR 10,000 to EUR 100,000. Publishers and other firms paying for foreign image rights or similar licenses will no longer need to apply for withholding tax waivers on amounts under this threshold. The obligation to file tax returns stays in place, so audits remain possible.
Electronic notification
Starting 1 January 2027, taxpayers with active ELSTER accounts will receive tax assessments and appeal decisions electronically by default, without needing to consent. An amendment to Section 122a of the German Fiscal Code removes the requirement for explicit approval. Notifications arrive by email, with documents accessible in the ELSTER account. Those without ELSTER accounts continue receiving assessments by mail. People with ELSTER can opt back to postal delivery by requesting it through their account.
On the international side, Germany is extending its platform reporting rules to third countries. Since 2023, online platforms have reported income from European providers; now that reporting will extend to providers based in countries with formal tax agreements with Germany.
Amendment to the Minimum Tax Act
Germany is adopting the OECD’s “Side-by-Side Approach” agreed to in January by countries in the Inclusive Framework on BEPS. This approach lets countries use their own tax rules as long as they achieve the same effect as the global minimum tax. The German Minimum Tax Act (via JStG 2026) will incorporate this agreement, and the government is amending its legal authority to issue statutory instruments so the broader simplifications can take effect.
Interest rates adjustments
The interest rate applied to tax arrears and refunds is rising. Last set in 2022 at 0.15% per month (1.8% annually), it’s moving to 0.3% per month (3.6% annually) starting in 2027. The increase reflects rising base rates in the civil code.
R&D allowances
Companies conducting research and development can now claim allowances up to EUR 25 million per company and project across multiple years, rather than being capped at periods examined individually. The government also suspended the expiry period for R&D certification, so companies won’t lose claims if certification drags past the normal assessment window.
VAT groups now require active choice
Currently, companies meeting legal criteria for VAT group status are automatically included. The new rule reverses this: a controlling entity must now actively declare its subsidiaries as part of a VAT group for the arrangement to take effect. Both establishing a group and adding individual subsidiaries can happen immediately, letting businesses adjust quickly to structural changes.
