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Abolishment of the discounting requirement for non-interest-bearing liabilities

22 June 2022

Roland Speidel, Certified Tax Advisor, Lawyer, Senior Manager, Department Tax & Legal |

At the end of each year, liabilities must be recognized at the respective settlement amount. Since the passing of the Tax Relief Act 1999/2000/2002 of 31.03.1999, non-interest-bearing liabilities must be discounted in the tax balance sheet at an interest rate of 5.5 % and valued accordingly at their present value. This does not apply to operating liabilities with a term of less than 12 months or which are based on an advance payment or prepayment. With a few exceptions, liabilities in the commercial balance sheet are generally measured at the settlement amount, i.e. not discounted. This inequality will now be eliminated by the Fourth Corona Tax Assistance Act of 19.06.2022 – also for the purpose of reducing bureaucracy and to simplify taxation.

Pursuant to the new version of § 6 (1) No. 3 of the German Income Tax Act (EStG), liabilities will be valued at their nominal value (= repayment amount) as of 01.01.2023.

According to the law decree, the previous discounting requirement could only be objectively justified if an obligation was formally non-interest-bearing, but actually also contained an interest component.

Given the (still) current low-interest phase with market rates of 0 % or even negative interest rates, the previous discounting requirement is no longer tenable and will therefore be abolished.

The discounting requirement can also be waived before 01.01.2023 for all assessment periods that are not yet final. All that is required is an informal application, which, however, can only be submitted uniformly for all the fiscal years concerned.

Non-interest-bearing liabilities from previous years that have already been recognized as liabilities can be written back to reduce profits by the amount of the discounting volume that still exists. For all future fiscal years, the abolishment means a considerable valuation relief for the tax balance sheet.

In addition, deferred taxes will no longer be reported in the commercial balance sheet. Non-interest-bearing liabilities with hidden interest (e.g. with third parties) must, however, be differentiated from this. Accruals and deferrals can be formed for these liabilities, which in turn can lead to different valuation approaches in the commercial and tax balance sheets.


Even after the amendment of the law, the discounting requirement and the interest rate of 5.5 % for provisions remain in place unchanged. In the context of the discussions on the law that has now been passed and the Federal Constitutional Court (BVerfG) decision of 08.07.2021 on the unconstitutional interest rate of 6 % for tax refunds or back payments, it remains unclear which interest rate can be used as a basis for provisions in the future. The current developments are to be monitored further.