Financing for the Future Act passed by the Bundestag and Bundesrat​

The measures passed by the German Bundestag intend to modernize the capital market and facilitate capital market access for businesses, particularly start-ups, high-growth companies and SMEs. In addition to comprehensive measures under business and financial market law, tax regulations should also be amended to this end.

The draft contains amendments to numerous laws and regulations. Among other things,

• it is intended to extend the scope of the Electronic Securities Act (Gesetz über elektronische Wertpapiere, eWpG) to include shares to make capital markets more attractive.
• At the same time, it is intended to remove obstacles to digitalization in supervisory law and to improve the framework conditions for communicating with the German Federal Financial Supervisory Authority (BaFin) in English.
• In order to improve the possibilities for initial public offerings (IPO), the regulatory requirements for IPOs and the requirements for capital increases under German corporate law should be eased-up. In addition, it is intended to allow dual-class shares with multiple voting rights.

The tax amendments provide in particular for an improvement of the tax conditions for employee share ownership effective from 2024. Among other things, this is intended to help companies to attract and retain the employees they want.

• To this end, the tax allowance for employee share ownership under section 3 no. 39 of the German Income Tax Act (Einkommensteuergesetz, EStG) is to be increased from 1,440 Euro to 2,000 Euro.
• In addition, the personal and temporal scope of application of the provisions in section 19a of the German Income Tax Act (Einkommensteuergesetz, EStG) on non-cash benefits from employee shareholdings is to be extended. Among other things, it is clarified that deferred taxation is also applicable to shares with restrictions on disposal (so-called restricted shares).