MoPeG adjustments and interest barrier pass Bundestag and Bundesrat

Following the recommendation of the Finance Committee on 13 December 2023, some provisions of the Growth Opportunities Act were incorporated into the Secondary Credit Market Promotion Act. The Bundestag passed the law on 14 December 2023. On 15 December 2023, the Bundesrat gave its approval to the following measures.

• The law makes the tax adjustments which are necessary due to the legal changes arising from the Act on the Modernization of Partnership Law (MoPeG) that come into force on 1 January 2024.
  • Associations with legal capacity and associations without legal capacity are legally defined and differentiated from one another (Section 14a AO). To this end, consequential amendments will be made to various tax laws such as the corporate tax law (KStG) and the inheritance tax law (ErbStG).
  • For the purposes of real estate transfer tax, partnerships with legal capacity will continue to be regarded as joint owners with joint assets (Section 24 GrEStG). The regulation is applicable for a limited period until 31 December 2026. Thus the current status quo for the participation of partnerships in situations relevant to real estate transfer tax is ensured until the end of 2026.
  • The tax liability of corporations with their registered office abroad and management in Germany is explicitly regulated and applies irrespective of their classification under German civil law (Section 14b AO).
  • It is clarified that the principle of joint and several liability continues to apply to the attribution of assets and continues to be assumed for income tax purposes for partnerships with legal capacity (Section 39 (2) No. 2 AO).
• The interest barrier is modified. The modifications correspond to the changes already provided for in the Bundestag resolution of 17 November 2023 on the Growth Opportunities Act.You can read more about this here.
• In addition, the relief provided by the gas/heat price brake is excluded from taxation.
• The law also includes the contribution rate for long-term care insurance in the wage tax deduction procedure and
• postpones the date for the first application of electronic data exchange between companies and private health insurers for the purpose of wage tax deduction.

Note: The amendment to the Real Estate Transfer Tax Act (GrEStG) clarifies, among other things, the question of the continued application of the benefits under Sections 5 to 7 GrEStG. These can continue to be applied to property transfers from or to a partnership with legal capacity until 2026. A breach of existing retention periods is also ruled out for the time being.