Merkel Reiterates German Tax Pledges

by Ulrika Lomas, Tax-News.com, Brussels

27 February 2018

German Chancellor Angela Merkel has repeated the incoming governing coalition's pledge not to raise taxes in Germany.

In a speech to the Christian Democrat Union party congress in Berlin on February 26, Merkel reiterated that the new program for government agreed with the center-left SPD would include "No new debts, no tax increases and at the same time, record investments in the big future areas."

The CDU and the SPD agreed to form another grand coalition earlier this month after talks between the CDU, the Free Democrats (FDP), and the Greens - the so-called Jamaica coalition - previously broke down without agreement as Merkel refused to accept the FDP's call for substantial tax cuts.

The new grand coalition have, however, committed to partially abolishing the solidarity tax, used to finance economic development in the former East Germany, with the measure targeting individuals on low and middle incomes. The parties also agreed to provide tax incentives to encourage home ownership.

The coalition agreement mentions wide implementation of BEPS commitments, and the implementation of BEPS measures under the European Union Anti-Tax Avoidance Directive, including strengthening anti-hybrid rules and introducing new controlled foreign company and interest deduction rules.

In addition, the parties called for "fair taxation" of large companies, in particular those operating largely in the digital realm, "like Google, Apple, Facebook, and Amazon."

Deeper economic cooperation with France is also included in the agreement, including in the area of corporate taxation, and the new German Government will support efforts to introduce a common tax base at EU level, as well as a minimum rate of corporate tax.

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