Germany Tax Changes — Live Tracker

What changed

The Investitionsabzugsbetrag (IAB) threshold was raised to €200,000, allowing more SMEs to claim upfront deductions for planned investments. Sonderabschreibung for movable assets increased from 20% to 40%, enabling faster write-offs. Degressive depreciation was reintroduced for movable assets acquired 2020-2024 at 25% (capped at 2.5x straight-line), and the IFRS group threshold was raised.

Who it affects

• SMEs and sole traders investing in movable business assets
• Companies acquiring equipment between 2020 and 2024
• Businesses planning capital expenditure eligible for IAB deductions

What to do

Review any planned capital investments to assess eligibility for the raised IAB threshold and higher Sonderabschreibung. Assets acquired in 2020-2024 may qualify for the reintroduced degressive depreciation — check with your Steuerberater and ensure elections are made correctly in your tax return.

What changed

The prior-year turnover threshold for the Kleinunternehmerregelung was raised from €17,500 to €22,000, and the in-year estimate ceiling to €50,000. Additionally, Germany harmonised with the EU SME scheme (Directive 2020/285), allowing German Kleinunternehmer to apply the VAT exemption in other EU member states without local VAT registration, subject to a €100,000 EU-wide turnover cap.

Who it affects

• Sole traders and freelancers (Freiberufler) near the old €17,500 threshold
• Small businesses selling goods or services cross-border within the EU
• New businesses assessing whether to opt into or out of Kleinunternehmer status

What to do

If your prior-year turnover was between €17,500 and €22,000, you may now qualify for the Kleinunternehmer exemption from 2025 — review whether opting in is advantageous given your input VAT position. If you sell to consumers in other EU countries, explore the new cross-border SME exemption to avoid registering for VAT in each member state.

What changed

The Mindestbesteuerungsrichtlinie-Umsetzungsgesetz introduced the Qualified Domestic Minimum Top-Up Tax (QDMTT) and the Income Inclusion Rule (IIR). MNE groups with consolidated revenue of €750m or more in at least two of the preceding four fiscal years must calculate their effective tax rate on a jurisdiction-by-jurisdiction basis and pay a top-up tax if the effective rate falls below 15%.

Who it affects

• Multinational enterprise groups with €750m+ consolidated annual revenue
• German parent entities of qualifying MNE groups
• German subsidiaries of foreign MNE groups subject to IIR or UTPR in their parent jurisdiction

What to do

Groups meeting the €750m threshold should confirm whether QDMTT or IIR applies for each German entity, prepare GloBE information returns, and review transfer pricing and existing tax planning structures for any effective rate implications. Engage a tax adviser with international tax experience to model the impact before fiscal year-end.

What changed

The degressive AfA for residential buildings was reintroduced at a rate of 5% declining-balance. This replaces the previous flat 2% or 3% straight-line rates for qualifying new-build residential properties. To qualify, construction must have begun after 30 September 2023 or the purchase/completion must have occurred after that date. The taxpayer can switch to straight-line depreciation at any point.

Who it affects

• Residential property investors and developers building new units
• Buyers of newly constructed residential buildings completed after 30 September 2023
• Companies holding residential property as business assets

What to do

If you own or are acquiring new residential property built after 30 September 2023, elect the degressive AfA method in your first tax return to benefit from the accelerated write-off. Keep documentation of the construction start date or completion date to evidence qualification. Review with your Steuerberater whether switching to straight-line at a later date would be more tax-efficient.

What changed

From 1 January 2025, all businesses operating in Germany must be technically capable of receiving structured e-invoices — PDF-only invoices no longer suffice as compliant electronic invoices. From 1 January 2027, businesses with prior-year turnover above €800,000 must issue e-invoices. From 1 January 2028, all remaining businesses must issue structured e-invoices for domestic B2B supplies. The format must comply with the European standard EN 16931 (ZUGFeRD 2.x or XRechnung).

Who it affects

• All VAT-registered businesses operating in Germany (receive obligation from 2025)
• Businesses with turnover above €800,000 (send obligation from 2027)
• All remaining German B2B businesses (send obligation from 2028)
• Accounting software and ERP providers serving German customers

What to do

Immediately verify that your accounting software can receive and process EN 16931-compliant e-invoices (ZUGFeRD or XRechnung) — this is already required. If your turnover exceeds €800,000, begin planning for e-invoice issuance before 2027. All businesses should update their invoicing workflows, supplier agreements, and ERP integrations to comply with the phased mandate.