Annual Tax Act 2024 enters into force

The Act contains around 130 amendments and new regulations in numerous areas of German tax law. In addition to adjustments to EU law and reactions to European and national case law, the Annual Tax Act 2024 (JStG 2024) implements several measures that will have a significant impact on taxpayers in Germany. Among other things, the Annual Tax Act 2024 contains the following measures:

• Extension of the scope of the e-balance sheet data set to be transmitted to the German tax authorities (Sec. 5b (1) EStG)
• In addition to the regulation on the continuation of the book value under Sec. 6 (5) 3 EStG to include the case of the gratuitous transfer of assets between partnerships with identical participation (reaction to the decision of the Federal Constitutional Court of 28 November 2023, case no. 2 BvL 8/13)
• Cancellation of the offsetting of losses capped at 20,000 euros per year for forward transactions and bad debts in private assets (deletion of Sec. 20 (6) 5 and 6 EStG)
• Implementation of the decisions of the Federal Constitutional Court of 24 November 2022 (case no. 2 BvR 1424/15) and 6 December 2022 (case no. 2 BvL 29/14) on the constitutionally compliant revision of the transitional provisions from the imputation to the half-income method in Sec. 34 and 36 KStG
• Simple trade tax property deduction in the amount of the property tax recognized as a business expense (Sec. 9 no. 1 1 GewSt)
• In the case of conversions by Sec. 3 ff. or Sec. 11 ff. UmwStG Introduction of a 14-month period for submitting the transferring corporation's final tax balance sheet to the tax authorities (Sec. 3 (2a) UmwStG)
• Introduction of exit taxation for investment units held as private assets (Sec. 19 (3), Sec. 49 (5) InvStG)
• Modification of the application rule on the requirements for cross-border financial transactions within a group under Sec. 1 (3d) AStG (Sec. 21 (1a) 2 AStG)
• New regulation of the place of supply for VAT purposes for the provision of services via streaming to non-entrepreneurs (Sec. 3a No. 3 UStG)
• Cancellation of the VAT warehouse regulation in Sec. 4 (4a) UStG
• Additional mandatory information in invoices "Taxation according to received remuneration" when applying actual taxation by the supplier (Sec. 14 (4) 1 no. 6a UStG)
• Right to deduct input VAT in the event of actual taxation by the supplier for invoices issued after 31 December 2027 only if payment has been made for the service provided (Sec. 15 (1) 1 no. 1 2 UStG)
• Revision of the small business regulation, including an increase in the turnover limits from 22,000 euro total turnover in the previous calendar year to 25,000 euros and 100,000 euros in the current calendar year instead of 50,000 euros (Sec. 19 (1) UStG), and introduction of a special notification procedure for the application of the small business regulation in another EU state in Sec. 19a UStG.
• Extension of the transitional regulation for the mandatory application of the new regulation on public sector VAT by two years until 31 December 2026 (Sec. 27 (22a) 1 UStG)
• Regulation on the attribution of a property in the event of an acquisition transaction subject to real estate transfer tax according to Sec. 1 (2a) to (3a) GrEStG in Sec. 1 (4a) GrEStG
• Application of the concept of joint ownership until the expiry of the subsequent retention periods according to Sec. 5 (3) 1 and Sec. 6 (3) 2 GrEStG in the version valid until 31 December 2026 (Sec. 23 (27) GrEStG)
• Possibility of proving a lower market value for property tax purposes under the federal model (Sec. 220 (2) BewG)
• Proportionate deductibility of estate liabilities in the case of limited inheritance tax liability according to Sec. 10 (6) 2 ErbStG in response to the ECJ ruling of 21 December 2021 (Case C-394/20)
• Extension of the preferential inheritance tax treatment of residential property to include property in third countries under further conditions (Section 13d (3) no. 2 ErbStG) in response to the ECJ ruling of 12 October 2023 (Case C-670/21).