Updates
Date:
This article was written by
Certified Tax Advisor, Manager, National Office Tax & Legal
On November 5, 2025, the German Federal Cabinet approved the draft of the “Seventh Ordinance Amending Tax Ordinances,” which addresses the technical adjustments necessary in several areas of taxation. Among other things, the following measures are intended:
The limits according to which parts of land used for business purposes, such as a home office or garage/storage room, do not have to be treated as business assets for tax purposes, have been revised (Section 8 of the Income Tax Implementation Regulation (EStDV)). Currently, parts of properties whose value does not exceed one-fifth of the fair market value of the entire property (relative limit) and does not exceed EUR 20,500 (absolute limit) are eligible for tax relief. The relative limit will be replaced by a static limit in the form of a maximum square meterage of 30 square meters; the absolute limit will be increased to EUR 40,000. In future, these two limits will be linked in such a way that the maximum square meter limit will be checked first. Only in cases where this limit is exceeded will it be necessary to check the absolute limit of EUR 40,000 in a second step.
The new regulation still provided for in the draft bill regarding the allocation of the total purchase price for a developed property according to the ratio of the market values of the land and the building (Section 9b EStDV-new) is deleted. Similarly, the initially planned addition of criteria for proving a shorter actual useful life of a building within the meaning of Section 7 (4) sentence 2 of the German Income Tax Act (EStG) and the submission of an expert opinion prepared for this purpose after a personal on-site inspection in accordance with Section 11c EStDV will not be pursued further.
The amendment to Section 4 (2a) of the German Wage Tax Implementation Ordinance (LStDV) regarding the data to be recorded in the wage account and transmitted via the Digital Wage Interface (Digitale LohnSchnittstelle, DLS) means that this data will be expanded to include electronic data from upstream and ancillary systems (e.g., electronic time recording or travel expense accounting systems, electronic logbooks). In addition, in future, transmission is to take place in a uniform DLS database for each system.
By amending Sections 61 and 61a of the Value Added Tax Implementation Ordinance (UStDV), entrepreneurs based in other EU countries or third countries will, as of January 1, 2026, be able to apply for the disclosure of input tax refund notices by making them available for data retrieval in accordance with Section 122a of the German Fiscal Code (AO).
The reporting obligations of land registry offices to inheritance tax offices in the event of a change of ownership based on a certificate of inheritance issued abroad in accordance with EU law are extended by the inclusion of a new No. 7 in Section 7 (1) sentence 1 of the Inheritance Tax Implementation Ordinance (ErbStDV). Until now, the land registry office has only notified the valuation tax office of the change of ownership.
Section 4 of the Tax Identification Number Regulation (StIdV) standardizes a deletion period for data stored on a person in accordance with Section 139b (3) of the German Fiscal Code (AO). According to this, the identification number and the data stored on it shall be deleted uniformly 20 years after the end of the calendar year in which the natural person died. If the person moves abroad, the data shall be deleted at the latest 20 years after the end of the 120th calendar year following the year of birth of the natural person, unless it is known that the person has died.
Section 17 (1) of the Tax Advisor Remuneration Regulation (StBVV) is amended to bring the provision on the document flat rate into line with the Lawyers’ Remuneration Act. The use of the terms “copies and printouts” is intended to clarify that the creation of scans – in particular for the purpose of individual work facilitation – is not covered by the document flat rate, as no separate costs, such as paper and toner costs, are incurred for this.
The amendment to Section 25 of the Ordinance on the allocation of profits of permanent establishments (BsGaV) is an adjustment based on the German Federal Fiscal Court ruling of June 5, 2024 (case no. I R 3/22). This is intended to clarify that the minimum capital required under insurance supervisory law, which an independent insurance company with a domestic insurance permanent establishment must at least report, may still not be fallen below.
The German-Luxembourg Consultation Agreement Regulation and the German-Dutch Consultation Agreement Regulation are no longer in force. Neither regulation is applicable to the current double taxation agreements with Luxembourg and the Netherlands, respectively, and have therefore become obsolete.
Furthermore, a regulation will be issued to implement the notification on the application of the credit method to certain income under the German-Lithuanian double taxation agreement to avoid double non-taxation of certain income due to the transfer of troops to Lithuania.
The amendment to the FATCA USA Implementation Regulation, which sets the fine for violations of reporting obligations at up to EUR 50,000, will not be implemented.
Notice:
The next step is for the German Federal Council to approve the ordinance. It will not be submitted to the German Federal Parliament for consideration. Once the Federal Council has given its approval, the ordinance is expected to be published in the Federal Law Gazette shortly thereafter.