Germany Puts Off Depreciation Changes To Help Business

by Ulrika Lomas, Tax-News.com, Brussels

24 August 2001

Although German Chancellor Gerhard Schröder and his colleagues have insisted that they are not planning any major stimulus to the country's sluggish economy and worsening unemployment, they seem happy enough to help out where they can on the fringes.

Even the Opposition Christian Democrats welcomed this week's decision to freeze the introduction of extended depreciation periods for some asset classes which were to have taken effect next January and which would have imposed an additional DM1.3bn ($610m, E665m) a year tax on businesses.

Business groupings also welcomed the move: "This is a correct decision; we should not send out any signals which might constrain companies' decisions to invest," said Hans-Jürgen Müller-Seils, head of tax affairs at the BDI, Germany's industry confederation.

The finance ministry said that the decision to put off the introduction of the extended depreciation schedules was because the issue had first to be examined by a specialist committee, which would not report for at least a year.

Officials said that the impact on next year's tax take would be up to DM500m, but declined to say whether or how this loss of revenue would be compensated in other directions.

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