Adjustment of the Tax Exemption Regulation for Photovoltaic Systems
The amendment to Section 3 No. 72 of the German Income Tax Act increases the gross output permitted for the application of the tax exemption from 15 kW (peak) to 30 kW (peak) per residential or commercial unit according to the market master data register. The amendment also clarifies that
- photovoltaic systems up to 30 kW (peak) per commercial unit are also eligible for buildings with several commercial units but without residential units and
- the tax exemption is a tax-free limit and not an allowance.
The amendment is to be applied for the first time to photovoltaic systems that were acquired, commissioned or expanded after December 31, 2024.
Depreciation of buildings (Section 7a (9) EStG)
The new amendment included in the government draft was necessary as a result of the introduction of Section 7 (5a) of the German Income Tax Act by the Growth Opportunities Act. Accordingly, after the expiry of the relevant preferential period of a special depreciation (such as the special depreciation for new rental housing in accordance with Section 7b of the German Income Tax Act), the further depreciation can also be calculated in accordance with Section 7 (5a) of the German Income Tax Act (residual value and the relevant percentage in accordance with Section 7 (5a) of the German Income Tax Act). However, the taxpayer must have already depreciated the asset using the declining balance method in accordance with Section 7 (5a) of the German Income Tax Act before the end of the special depreciation period. The change is to apply retroactively from the beginning of 2023.
Book Value Transfer between Partnerships with Identical Shareholdings
In response to the decision of the German Federal Constitutional Court on the book value transfer between partnerships with identical shareholdings of November 28, 2023, BvL 8/13, a new no. 4 is added to Section 6 (5) sentence 3 of the German Income Tax Act. This stipulates a continuation of the book value if an asset is transferred “free of charge between the joint assets of different partnerships of the same, identically participating co-entrepreneurs”. This eliminates the unconstitutional unequal treatment in that such transfers were previously not covered by the wording of the law. The regulation is to be applied in all open cases. However, in order to protect legitimate expectations, the new regulation may not be applied to transfers before January 12, 2024 (= date of publication of the ruling of the German Federal Constitutional Court) if the co-entrepreneurs involved in both co-entrepreneurships jointly apply for this.
Addition of a Group Clause in Section 19a of the German Income Tax Act
The scope of application of the tax concession in Section 19a of the German Income Tax Act (downstream taxation in the event of the preferential granting of a shareholding) is extended to the transfer of shares in group companies. However, in order to prevent this group clause from indirectly benefiting employees of large stock corporations, the group as a whole must also comply with the thresholds of Section 19a (3) of the German Income Tax Act. In addition, none of the group companies may have been founded more than twenty years ago.
Flat-Rate Taxation for so-called Mobility Budgets
In special cases, the employer can levy income tax at a flat rate of 25 % (Section 40 (2) of the German Income Tax Act). This should also be possible via a new no. 8 if the employee is granted benefits from a so-called mobility budget up to a maximum annual amount of EUR 2,400 in addition to the wages already owed.
A mobility budget in this sense is the offer made to the employee to use off-duty mobility services such as e-scooters, the occasional use of car-sharing, bike-sharing and other sharing offers and travel services, regardless of the means of transport, in the form of a non-cash benefit or subsidy; aircraft, private motor vehicles and motor vehicles permanently provided to the employee, including company motor vehicles, are excluded. Overall, the focus is on the short-term, occasional and needs-based provision of various forms of mobility. Therefore, the possibility of permanent and not just occasional use of motor vehicles (e.g. long-term rental, leasing or subscription models) is excluded from the scope of the regulation. It is irrelevant whether the employer provides the mobility services himself or through a third party at his instigation.