German Govt Determined To Grant Businesses Tax Relief From 2010

by Ulrika Lomas, Tax-News.com, Brussels

13 October 2009

Fully aware that there is little scope to implement tax cuts at present, Germany’s newly elected Coalition partners, the Christian Democratic Union (CDU) and the Free Democratic Party (FDP), nevertheless remain determined to press ahead with their tax cut plans – with businesses, it would appear, the first to benefit.

Far from heeding recent advice, both parties appear intent on granting tax relief to businesses, from as early as next year. Focusing on the key issue of corporate tax, working groups from both parties are seeking to introduce vital changes to the country’s existing legislation from January 1, 2010, in a desperate bid to provide an additional impetus for economic growth.

According to CDU member Michael Fuchs, both parties are intent on providing much-needed tax relief to companies. It is vital, he added, to abolish certain elements of capital gains tax, which are merely serving to exacerbate the effects of the global economic crisis. In the area of corporate taxation, amendments to the interest limit are essential, he explained, along with changes to the country’s inheritance tax, including the payroll rule.

The CDU intends to reduce the tax burden on individuals progressively, by around EUR15bn. The FDP is aiming to implement tax cuts on a much larger scale, in the region of a reported EUR35bn.

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