On 7 November 2019, the German Federal Parliament passed the Annual Tax Act 2019. The German Federal Council is expected to approve the Annual Tax Act on 28 November 2019. The changes shall generally come into effect as of 1 January 2020.
Corporate income tax:
The Research Allowance Act is introduced to increase the attractiveness of Germany as a research location. According to this bill, a research allowance may be credited against the corporate income tax payable or in the case of a loss situation paid directly to the taxpayer. The research allowance is granted for fundable expenses of fundable R&D activities. Fundable R&D activities include basic research, applied research and experimental development which fulfil the five criteria of the Frascati Manual of the OECD.
The assessment base includes eligible expenditure up to a maximum of EUR 2 million per year per enterprise, while the amount of the allowance is 25% of the assessment base.The maximum allowance is therefore € 500,000 per year and company. However, this amount is only granted once for a related group of companies. In the case of a research cooperation between non-affiliated companies, each eligible party may be granted the maximum allowance.
Individual Income tax:
Following measures concern tax relief for employees and procedural relief for employers:
- a lump sum is introduced for professional drivers;
- the lump sums for additional meals will be increased;
- a reduced VAT rate will be introduced for e-books, e-papers and databases products;
- hospital services and catering services to students and pupils are exempt from VAT;
- for company bicycles, a flat-rate taxation scheme is introduced;
- for domestic operators of Internet platforms providing investments, a tax deduction obligation is introduced; and
- The housing premium will be increased from € 512 / 1,024 (single / married) to € 700/1400.
