Bureaucracy Reduction Act (BEG IV) - Important new tax regulations
The Fourth Bureaucracy Reduction Act (Vierte Bürokratieentlastungsgesetz, BEG IV) came into force after of its approval by the Bundesrat [upper house of parliament] on 18.10.2024 and its subsequent publication in the German Federal Law Gazette. The aim of the Act is to further reduce administrative red tape, particularly for businesses and, to this end, it includes a range of individual measures in different fields of law. This report provides an overview of the main tax measures under the legislation.
Shortening of the retention periods for accounting documents and invoices
The retention periods for accounting documents under German commercial and tax legislation will be uniformly reduced from ten years to eight years via the respective legislative changes (Section 257(4) of the German Commercial Code; Section 147(3) sentence 1 of the Fiscal Code [Abgabenordnung, AO]). Similarly, the retention period for invoices for VAT purposes will be reduced to eight years (section 14b(1) sentence 1 of the VAT Act [Umsatzsteuergesetz, UstG]). These simplifications will apply to all accounting documents and invoices whose retention period had not yet expired on the day before the legislation came into force.
Electronic provision and disclosure of administrative documents
With a view to boosting the digitalisation of the taxation procedure, the legal framework for the publication of administrative documents is going to be modernised. Tax assessment notices issued after 31.12.2025 and other documents from the tax administration will be made available electronically and access will thus be provided to them; on the fourth day after the documents have been made available, they will be deemed to have been made known. This will apply, in particular, if the tax return or the statement illustrating the determination of the bases for tax assessment had been sent electronically to the tax administration. According to the new rules, the recipient’s consent is not required for digital provision.
Further simplifications for reporting and information obligations
The new rules apply, first of all, to the threshold for the obligation to file monthly advance VAT returns pursuant to Section 18(2) sentence 2 UStG. Up to now, monthly filings instead of quarterly ones were mandatory if the amount of VAT payable in the previous year exceeded the threshold of €7,500. As of 1.1.2025, this threshold will go up to €9,000. The threshold for the option to file monthly advance returns pursuant to Section 18(2a) sentence 1 UStG will be adjusted accordingly.
A further VAT related change concerns the application of the margin scheme pursuant to Section 25a(4) UStG. Accordingly, a reseller’s turnover can be determined on the basis of the overall difference from all the purchases and sales made within a taxation period insofar as the purchase prices of the individual items do not exceed the de minimis threshold level. Under the BEG IV, to enhance the simplification, this de minimis threshold level will be increased from €500 to €750 as of 1.1.2025.
Law makers have also introduced simplifications with respect to the exemption certificate for capital gains tax and tax deduction in the case of taxpayers with restricted tax liability pursuant to Section 50a of the Income Tax Act (Einkommenssteuergesetz, EStG). The validity of the exemption certificate will thus be extended from a maximum hitherto of three years to five years (Section 50c(2) sentence 4 EStG).
