Insights
TAX & BUSINESS
Tax aspects from the government programme
With the 2025‑2029 government programme the new administration presented the key points of measures for budget consolidation, as well as growth‑ and employment‑promoting measures. Below some of the planned measures are summarised.
- New codification of the Income Tax Act (EStG) with the aim of enacting a new Income Tax Act. The goal is a comprehensive package of measures for simplification, de‑bureaucratisation and digitalisation of payroll processing and employee tax returns.
- To substantially ease business transfers, the tax exemption for disposals will be increased from 1 January 2027 from EUR 7,300 to EUR 45,000. In addition, the professional ban will be removed for the use of the earnings‑tax “half‑rate” in connection with business cessation or disposal after the age of 60.
- Increase of the assessment base for the basic allowance (profit allowance) to EUR 50,000 from 2027 (subject to budgetary approval) instead of the current EUR 33,000.
- Increase of the basic flat‑rate including the input‑tax flat‑rate from 2025 initially to EUR 320,000 at 13.5 % and from 2026 to EUR 420,000 at 15 %.
- Introduction of an attractive “Working in old age” model, in which the additional earnings of employees are taxed at a final rate of 25 %, together with an exemption from social‑security contributions for employees. Employers will pay half of the pension and health‑insurance contribution, the remaining payroll costs staying unchanged.
- Introduction of an improved tax‑free employee bonus for 2025 and 2026.
- Increase of the (tax) luxury threshold for motor vehicles from 2027 to EUR 55,000 and subsequently further up to around EUR 65,000 (subject to budgetary possibilities).
- Closing the gap in real estate transfer tax (Grunderwerbsteuer, GrESt) from 1 July 2025, to capture large property transactions (share deals) more effectively for tax purposes (e.g., by aggregating linked purchasers).
- Private foundations: increase of the foundation entry tax and the foundation entry tax equivalent to 3.5 % and the intermediate tax for foundations to 27.5 %.
- Dedication profits from endowments should be captured more tax‑efficiently in 2025 within the real‑estate income tax (Immo‑ESt) framework (dedication levy). The rule will apply to all legal and natural persons.
- Package of measures in the area of fraud combat: abolition of input‑tax deduction for luxury real estate, extension of the reverse‑charge mechanism under VAT (UStG) to land transactions, more effective design of exit taxation, and effective use of new data sources such as automatic information exchange on crypto‑account holdings.
- Simplification of withholding‑tax refunds through swift implementation of the FASTER directive (e.g., a common digital EU certificate of tax residence); coordinated and legally secure framework conditions for cross‑border home‑office/remote‑working.