Federal Council blocks tax relief for companies
The Bundesrat has blocked tax relief for companies amounting to seven billion euros per year. A clear majority of the federal states voted to refer the so-called Growth Opportunities Act to the mediation committee of the Bundestag and Bundesrat.
It is still unclear when this committee will meet and what a compromise might look like. Several state premiers criticized the fact that two thirds or almost 20 billion euros of the missing tax revenue would remain with the states and municipalities.
According to earlier statements from the responsible finance committee, the Bundesrat is seeking a fundamental revision of the draft bill. The Bundestag approved the bill on Friday last week with the votes of the "traffic light" coalition.
It provides for relief for small and medium-sized companies amounting to around seven billion euros per year from 2024 and a total of over 32 billion euros in the coming years. The package is intended to breathe new life into the sluggish German economy. The centerpiece is a premium of 15 percent of the total amount for investments in climate protection measures.
However, this is less extensive than the "super write-offs" actually envisaged in the coalition agreement, which were also intended to boost investment in digitalization. Elsewhere, however, companies are now being granted significantly better depreciation opportunities for a limited period of time - both for movable assets and housing construction. Companies will also be better able to offset losses against profits. In addition, tax incentives for research will be extended.
The Federal Council's decision to block tax relief for companies has been challenged by several state premiers, who question the distribution of the missed revenue between levels of government. The Mediation Committee, established by the Bundesrat and Bundestag, will play a crucial role in finding a compromise on the Growth Opportunities Act, which originally aimed to provide tax relief worth seven billion euros per year for companies.
Source: www.ntv.de
