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German federal Cabinet passes the draft of the Economic Growth Acceleration Act
The new governing coalition has announced comprehensive tax reliefs for companies particularly in the fields of income tax, corporation tax and real estate transfer tax for year 2010. The first step of these tax reliefs shall now be implemented in the so-called Economic Growth Acceleration Act. Luther, our German member, investigate how this will impact multinationals.
The German Federal Cabinet has passed the draft on 9 November 2009. It is currently intended that the German Parliament will conclusively deal with the draft bill on 4 December 2009. The following shall give an overview of significant changes of tax law which are envisaged according to the draft bill.
If actually implemented, the amendments announced by the draft bill would indeed provide tax relief to companies and reduce tax barriers for restructuring measures. However, in some cases (e.g. escape clause within the interest ceiling rules, reduction of the trade tax add back for rental and lease payments) legislation will significantly fall short behind the expectations raised by the coalition agreement, since the respective tax relief will hardly have noticeable effects. It remains to be seen how legislation, in the course of the legislative procedure, will adopt and implement in the final bill the remarks and suggestions which can be expected from politicians, economists and organisations. Naturally, we will keep you informed about the current developments.
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