Following the adoption by the German Bundestag (national parliament of the Federal Republic of Germany), the Bundesrat (upper house of the German parliament) approved the Annual Tax Act on 16 December 2022. After promulgation in the Federal Law Gazette, the tax changes for 2023 and partly also retroactively for 2022 are fixed. We had already reported on some planned changes in October and December. For this reason, only the changes that differ from the draft bills are shown below:

Building depreciation:

Taxpayers previously had the option of claiming a reduced depreciation period for their buildings if they could prove a shorter useful life. The first draft bill provided for a deletion of this regulation, but the option will now remain in place as before. The increase in the straight-line depreciation rate from 2% to 3% was originally intended to affect buildings completed after 30 June 2023, but will now apply to buildings completed after 1 January 2023.

Basic pension supplement:

The pension amount paid on the basis of the basic pension supplement will be tax exempt with retroactive effect from 1 January 2021.. As a result, the taxpayers concerned will receive the basic pension supplement in full and thus have more money available to cover their living expenses.

Allowance for income-related expenses:

The employee lump sum for income-related expenses will increase to €1,230 per assessment period from 2023.

Relief amount for single parents:

The relief amount for single parents will be increased by €252 to a total of €4,260.

Home office:

If the home office is not the centre of the entire professional activity, the maximum amount will be converted into a lump sum of €1,260 per assessment year from 2023, which may be granted to the taxpayer. This means that proof of the actual costs incurred no longer have to be provided.

Home office allowance:

The current regulation will be further extended and, from 2023, €6 per calendar day up to 210 calendar days spent in the home office can be declared as a tax deduction, resulting in a maximum amount of €1,260 per year. The amount remains the same even if there are several employment relationships. A separate home office is not needed to qualify for the allowance.

Promotion of photovoltaic systems:

In order to further promote the expansion of PV systems, an income tax exemption is to apply to certain PV systems. This includes PV systems with a maximum output of 30 kW (gross nominal output according to the market master data register) for single-family homes and commercial properties or 15 kW per residential and commercial unit for other buildings. Contrary to the original bill, these no longer have to be used predominantly for residential purposes. This regulation applies retroactively as of 1 January 2022.

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Assessment ceilings, non-cash remuneration values and artists’ social security contributions for 2023
Obligations to report cross-border tax arrangements
Increase in the minimum wage and the minijob-threshold

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