In the Annual Tax Act 2022 there are some goodies for taxpayers. These include the full deduction of pension insurance contributions as early as next year, better depreciation conditions for future landlords, a higher savings allowance and an increased training allowance.
But at least as interesting as what Finance Minister Christian Lindner (FDP) had written in the draft bill is what is missing there: the bonus for investments in climate protection and digital assets (super depreciation), the successor regulation for the home office, the delayed increase of the taxable portion of the pension and the opening up of the real estate transfer tax, which enables countries to facilitate the acquisition of owner-occupied living space – all points that the traffic light has made.
Annual tax laws are so-called omnibus laws. They are an opportunity for the Minister of Finance to tackle a lot. Mostly it is about decisions of the Federal Fiscal Court, European directives and the tacit correction of minor inaccuracies in tax law. Lindner only partially uses the opportunity to tackle projects from the coalition agreement.
It is striking that only half of the announced reform of pension taxation has been implemented. The contributions should be 100 percent tax deductible as special expenses from the turn of the year – two years earlier than under current law. But in the coalition agreement, the SPD, Greens and FDP also agreed to increase the taxable portion by only half a percentage point annually from next year. The reason for this was a ruling by the Federal Fiscal Court, which had warned against double taxation of pension contributions and pension payments if there were no changes. This part is missing from the bill.
New pension rule saves taxpayers 3.2 billion euros
Even if only half of the pension policy project is dealt with, it remains by far the most financially important part of the bill. According to calculations by the Ministry of Finance, it relieves the contributors by 3.2 billion euros in the first year of full effect. The tax losses are distributed among the federal, state and local governments according to the usual formula. In addition, the basic pension surcharge is made tax-free. “As a result, the basic pension surcharge can be available in full without being taxed and thus contribute undiminished to securing the livelihood,” says the reasoning. This has little effect in practice. The effect is estimated at 50 million euros.
For the entire law, Lindner’s experts put the loss of revenue at a good 4.1 billion euros. The second largest individual measure relates to the construction of new rental apartments. The deduction for wear and tear (AfA) is to be increased from 2024 to 3 percent. “This means that in future all buildings will generally be depreciated over a period of 33 years,” the draft law explains.
New allowances are coming
So far, this has only been the case after 50 years. In justified exceptional cases, this is already faster today. The taxpayer must prove that this is justified. “In practice, the current case law of the BFH is already leading to a significant increase in applications for a shorter useful life and thus higher depreciation for buildings,” says the reasoning. The new AfA rule is intended to simplify the bureaucratic process. It costs the tax authorities an estimated half a billion euros.
The increase in the saver’s allowance at the beginning of 2023 from 801 to 1000 euros (married couples double) will cost 315 million euros. “In order to make the technical implementation easy, exemption orders that have already been issued will be increased on a percentage basis,” it says. The adjustment of the training allowance from 924 to 1200 euros has only minor consequences for the tax authorities. The increased special needs for adult children who are in vocational training and are housed abroad is estimated at 70 million euros. In addition, the law should make it possible to use the tax identification number in order to be able to pay out public services such as the planned “climate money” directly. The traffic light wants to use it to cushion the costs of climate policy.
Lindner’s ministry sent the draft law to the business associations this week. They have until August 11 to comment. The draft law should therefore be formally approved by the cabinet at the end of the month, leaving enough time for legislation this year.